GIFT   OF 
Dean  Frank  H.    Probert 


/ 


THE  COST   OF  MINING 


Published    by  the 

McGraw-Hill    Book.  Company 


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THE  COST  OF  MINING 

AN  EXHIBIT  OF  THE  RESULTS 
OF  IMPORTANT  MINES 
THROUGHOUT  THE  WORLD 


BY 

JAMES   RALPH   FINLAY 

SECRETARY  MINING  AND  METALLURGICAL  SOCIETY  OF  AMERICA  ;    MEMBER  AMERICAN 

INSTITUTE    OF    MINING    ENGINEERS  ;    LECTURER    AT    HARVARD 

UNIVERSITY  ON  THE  ECONOMICS  OF  MINING 


SECOND  EDITION,  CORRECTED 


McGRAW-HILL  BOOK  COMPANY 

239  WEST  39TH  STREET,  NEW  YORK 
6  BOUVERIE   STREET,  LONDON,  E.G. 
1910 


Copyright,  1909,  1910  by  the  McGRAW-HiLL  BOOK  COMPANY 

T 

GIFT  OF 

DEAN  FRANK  H  PROBERT 

PEW. 


DEW. 


The  Plimpton  Press  Norwood  Mass.  U.S.A. 


PREFACE 

THIS  book  is  the  result  of  experience  in  the  mining  business 
covering  some  twenty  years,  in  the  earlier  of  which  I  had  to 
do  in  rapid  succession  with  such  diverse  operating  conditions 
as  those  presented  by  Lake  Superior  iron  mines,  gold  mining  in 
Ecuador  and  Colorado,  and  lead  mining  in  Idaho  and  Missouri. 
The  profound  differences  in  methods  imposed  by  natural  condi- 
tions could  not  fail  to  impress  themselves  on  one's  attention. 

Some  six  years  ago  a  discussion  started  by  Messrs  T.  A.  Rick- 
ard  and  W.  R.  Ingalls  of  the  Engineering  and  Mining  Journal  on 
the  "Cost  of  Mining"  attracted  considerable  discussion  from  min- 
ing engineers  throughout  the  world,  and  I  contributed  some 
articles.  It  was  natural  to  continue  the  investigation  of  the 
subject.  In  1908,  at  the  suggestion  of  Mr.  Ingalls,  I  undertook 
to  prepare  some  more  extended  articles  for  the  same  journal 
with  a  view  of  rationalizing  the  subject  to  show  how  the  natural 
factors  inevitably  impose  certain  costs  that  sound  engineering 
must  recognize,  and  that  to  attempt  economies  unjustified  by 
the  conditions  is  the  rankest  extravagance. 

This  book  is  the  outgrowth  of  those  articles  and  to  a  lesser 
extent  of  some  lectures  given  at  Harvard  University  and  a  large 
amount  of  discussion  and  correspondence.  The  subject  is  one 
that  is  inherently  interesting  to  mining  men  and  mining  engineers 
and  it  seems  possible  that  it  may  interest  a  somewhat  wider  field. 
Those  who  are  interested  in  financial  and  economic  developments 
can  hardly  escape  some  contact  with  the  mining  business. 

A  full  treatment  of  the  subject  would  be  encyclopedic,  but 
no  attempt  is  made  here  to  give  the  work  that  character.  I 
have  merely  tried  to  give  a  certain  perspective  of  the  business 
in  coal,  iron,  lead,  zinc,  copper,  gold,  and  silver,  concentrating 
my  effort  largely  on  an  attempt  to  exhibit  facts  in  their  proper 
proportion.  The  principal  source  of  facts  is  the  official  reports 
of  mining  companies  which  are  not  in  some  fields  so  numerous 
as  could  be  wished,  and,  in  fact,  from  some  districts  are  not  to 


vi  PREFACE 

be  had  at  all.  The  best  and  most  numerous  reports  are  issued 
by  copper,  lead,  and  gold  mining  companies. 

In  the  coal  business,  reports  of  a  certain  kind  are  abundant 
and  generalized  statistics  are  exceedingly  abundant,  but  little 
is  to  be  had  in  the  way  of  detailed  information  necessary  to  a 
satisfactory  cost  analysis.  Consequently,  the  chapters  on  coal 
mining  are  more  general  than  those  on  other  subjects;  but  while 
a  detailed  treatment  of  this  immense  business  would  require  a 
volume  in  itself,  it  may  be  remarked  that  coal  mining  is  the 
simplest  form  of  the  industry  and  a  sketch  of  its  essential  features 
does  not  need  to  be  a  long  one. 

A  single  corporation  accounts  for  55  per  cent,  of  the  iron  out- 
put of  the  United  States,  and  at  the  same  time  its  reports  are 
far  more  luminous  than  those  of  any  other  concern  in  this  busi- 
ness. Accordingly  much  attention  is  given  to  the  results  and 
statistical  history  of  the  United  States  Steel  Corporation.  The 
independent  companies  are  either  utterly  secretive  or  give  only 
financial  statements  that  do  not  yield  much  to  analysis. 

The  discussion  of  lead  mining  covers  the  results  obtained  by 
companies  typical  of  the  conditions  under  which  80  per  cent,  of 
the  American  product  is  secured. 

In  zinc  mining  information  is  not  very  satisfactory,  but  it  is 
possible  to  give  some  idea  of  the  operating  conditions  under  which 
some  80  per  cent,  of  the  American  product  is  obtained. 

In  copper  mining  a  great  deal  of  detailed  information  is  to  be 
had  showing  results  in  a  fairly  satisfactory  way  in  districts  that 
produce  nearly  90  per  cent,  of  the  North  American  copper.  A 
few  examples  are  taken  from  the  outside  world. 

In  gold  and  silver,  the  United  States  is  not  pre-eminent 
and  examples  are  taken  rather  freely  from  all  parts  of  the 
world. 

It  will  be  seen  that  the  work  deals  largely  with  results ;  matters 
of  an  engineering  or  technical  nature  are  generally  left  out  even 
to  the  extent  of  ignoring  such  matters  as  the  assay  values  of  ores. 
This  is  done  in  order  to  make  the  conclusions  base  themselves 
on  strictly  practical  and  conservative  grounds.  It  happens  by 
way  of  coincidence  that  this  volume  will  serve  as  a  kind  of  sup- 
plement to  Mr.  H.  C.  Hoover's  work  on  the  "  Principles  of  Mining," 
which  deals  with  the  processes  of  valuation,  organization,  and 
administration,  and  the  methods  used  in  mining  the  more  pre- 


PREFACE  vii 

cious  metals.  The  reader  will  find  in  Mr.  Hoover's  book  an  out- 
line of  some  of  the  technical  problems  not  dealt  with  here. 

I  must  acknowledge  the  assistance  given  by  various  friends 
in  the  preparation  of  this  work.  Professor  H.  L.  Smyth  of  Har- 
vard University  in  particular  has  aided  with  many  important 
suggestions  and  is  responsible  for  portions  of  Chapters  I  and  II. 
Mr.  W.  R.  Ingalls,  editor  of  the  Engineering  and  Mining  Journal, 
has  kindly  allowed  me  to  republish  from  the  "  Mineral  Industry  " 
of  1908  his  important  study  of  the  cost  of  "  Silver- Lead  Smelting/' 
which  forms  the  whole  of  Chapter  XVI.  Mr.  Raphael  Welles 
Pumpelly  has  given  great  assistance  in  looking  over  many  reports. 
Messrs.  F.  W.  Bradley,  T.  A.  Richard,  J.  Parke  Channing,  Dr. 
Douglas,  Courtlandt  E.  Palmer,  H.  M.  Chance,  George  S.  Rice, 
and  many 'others  have  all  contributed  from  time  to  time  valuable 
suggestions  and  criticisms. 

I  cannot  help  feeling  that,  while  all  of  the  material  in  this 
book  is  either  old  or  public  property  to  the  extent  of  being  known 
to  at  least  a  portion  of  the  profession,  there  is  nevertheless  some- 
thing new  in  it  in  that  it  presents  a  view  of  the  economics  of 
mining  on  a  grand  scale  and  in  broad  outline.  It  does  not  seem 
possible  that  a  mining  man  can  fail  to  understand  my  meaning. 
If  the  facts  are  right  the  book  is  right.  But  in  the  great  range  of 
facts  that  I  have  tried  to  look  into  many  things  are  more  or  less 
obscure  and  it  is  difficult  to  be  sure  that  my  information  is  author- 
itative. I  shall  be  greatly  obliged  if  the  readers  of  this  book  will 
point  out  errors  or  supply  information.  If  there  is  any  demand 
for  it  I  shall  be  glad  to  prepare  a  revised  edition  later,  filling  in 
some  of  the  shortcomings  of  the  present  one. 

J.    R.     FlNLAY. 

NEW  YORK,  September,  1909. 


CONTENTS 


CHAPTER  PAGE 

I  VALUE  OF  MINING  PROPERTY        1 

II  FACTORS  GOVERNING  VARIATIONS 19 

III  PARTIAL  AND  COMPLETE  COSTS 39 

IV  STATISTICS  OF  COAL  PRODUCTION 52 

V    COST  OF  MINING  COAL 64 

VI     COST  OF  MINING  LAKE  SUPERIOR  IRON 85 

VII     OCCURRENCE  AND  PRODUCTION  OF  COPPER 122 

VIII     LAKE  SUPERIOR  AMYGDALOID  COPPER  MINES 129 

IX  CONGLOMERATE  COPPER  MINES  OF  LAKE  SUPERIOR     .      .      .  159 

X  COPPER  MINES  ON  FISSURE  VEINS  IN  MONTANA,  AUSTRALIA, 

AND  ARIZONA 166 

XI  VARIOUS  COPPER  MINES  OF  ARIZONA  AND  MEXICO      .      .      .  177 

XII  COPPER  MINES  IN  VARIOUS  OTHER  DISTRICTS  .      .      .      .      .  205 

XIII  THE  COPPER  MINING  BUSINESS  IN  GENERAL 236 

XIV  LEAD 250 

XV    SILVER-LEAD  MINING 267 

XVI  THE  COST  OF  SILVER-LEAD  SMELTING 295 

XVII  ZINC  MINING 308 

XVIII  OCCURRENCE  AND  PRODUCTION  OF  GOLD 324 

XIX  QUARTZ-PYRITE  GOLD  MINES 338 

XX  CRIPPLE  CREEK,  KALGOORLIE,  AND  GOLDFIELD  ....  374 

XXI     SILVER  MINING  AT  COBALT  AND  GUANAJUATO 393 


ix 


THE    COST   OF   MINING 

CHAPTER  I 
VALUE   OF  MINING  PROPERTY 

Popular  tendency  to  take  fragmentary  view  of  mining  industry  —  Its  real 
extent  and  growth  —  Basis  of  valuation  of  mines  —  Average  prices  — 
Average  costs  —  The  concurrent  fluctuation  of  prices  and  costs  —  Gen- 
eral principles  of  relation  of  cost  to  price  —  Types  of  mining  enterprises 
—  The  nature  of  a  mining  investment  —  Algebraic  discussion  of  the 
calculation  of  present  values  of  mining  stocks  from  determined  factors  — 
The  most  profitable  length  of  period  for  working  out  mines  with  known 
ore  reserves. 

IN  this  volume  I  propose  to  discuss  the  business  of  mining 
on  broad  lines.  Most  people  who  connect  themselves  with  this 
most  important  industry  are  interested  only  in  certain  sections 
of  it,  even  to  a  point  of  almost  forgetting  that  there  is  a  mining 
business  outside  of  their  own  particular  field.  People  who  have 
been  engaged,  for  instance,  in  gold  mining  are  apt  to  think  of 
coal  and  iron  mining  as  a  different  business.  We  find  people 
talking  about  mining  stocks  in  an  unjustifiably  restricted  sense. 
A  certain  group  will  think  of  mining  stocks  as  referring  to  shares 
in  highly  speculative  precious  metal  enterprises,  and  will  not 
even  consider  as  coming  within  their  range  such  really  stable 
and  valuable  securities  as  those  of  the  Homestake,  Treadwell, 
or  of  the  many  great  gold-mining  enterprises  controlled  by  Brit- 
ish capital.  The  public  does  not  know  that  the  class  of  specu- 
lative gold  and  silver  \mines  which  depend  on  the  discovery 
of  an  occasional  bonanza,  which  is  very  likely  to  be  exploited 
much  more  vociferously  in  the  newspapers  and  on  certain  stock 
exchanges  than  its  value  warrants,  forms  only  an  insignificant 
fraction  of  the  mining  business.  Such  properties  really  depend 
more  on  psychology  than  on  values.  It  is  instinctive  with  a 
certain  fraction  of  the  human  race  to  be  enormously  attracted 
by  the  glitter  of  gold. 

1 


THE    COST    OF    MINING 

Another  section  of  the  mining  public  is  that  which  devotes 
itself  to  speculation  in  copper  shares,  ignoring  on  the  one  hand, 
as  too  speculative,  ventures  in  gold,  silver,  or  lead,  and  on  the 
other  hand,  as  too  slow,  ventures  in  coal,  iron,  or  building  ma- 
terial. We  have  a  very  much  larger  group  of  people  interested 
in  coal  and  iron,  who  look  upon  their  business  as  being  more 
allied  to  manufacturing  and  devoid  of  the  speculative  element 
that  is  supposed  to  enter  so  largely  into  the  mining  business. 

EXTENT  AND  GROWTH  OF  MINING  BUSINESS 

As  a  matter  of  fact  the  real  mining  business  of  the  United 
States  or  of  the  world  at  large  is  too  vast  to  be  readily  compre- 
hended by  any  single  person.  The  technical  part  of  copper 
mining  or  of  oil  production  is  in  itself  a  sufficient  study  for  any 
man  who  wishes  to  devote  himself  to  it;  but  from  the  standpoint 
of  the  investing  public  not  directly  concerned  with  the  manage- 
ment of  properties  there  is  no  necessity  for  dwelling  in  much 
detail  on  the  separate  sections  of  the  mining  business.  Ulti- 
mately there  is  no  essential  distinction  between  mining  brick 
clay  and  mining  diamonds.  They  are  equally  natural  products; 
they  must  be  looked  for  and  handled  on  pretty  much  the  same 
principles.  It  is  probably  a  fact  that  brick  clay  is  just  as 
profitable  and  just  as  valuable  as  the  rock  which  contains  the 
almost  infinitesimal  proportion  of  diamonds  which  give  it 
value. 

It  may  be  a  matter  of  surprise  to  many  business  men  to  learn 
that  in  1907  the  total  mineral  production  of  the  United  States 
in  a  crude  form  at  the  mines  or  metallurgical  works  was  $2,069,- 
000,000;  that  the  total  number  of  men  employed  in  this  business 
must  be  approximately  2,500,000;  that  of  this  total  output  the 
value  of  silver  is  less  than  2  per  cent.;  of  gold  less  than  4i  per 
cent.;  copper  less  than  9  per  cent.;  while  pig  iron  accounts  for  25 
per  cent.;  coal,  30  per  cent.;  natural  gas  and  petroleum  equal 
the  value  of  copper;  and  structural  materials  such  as  clay,  cement, 
lime,  and  stone  amount  to  15  per  cent.  The  contemplation  of 
these  figures  will  be  a  great  help  to  one's  sense  of  proportion  in 
the  mining  business.  I  accordingly  present  the  following  tables 
of  mineral  production  from  the  reports  of  the  U.  S.  Geological 
Survey: 


VALUE    OF    MINING    PROPERTY 


1? 

598 

19 

07 

Quantity 

Value 

Quantity 

Value 

Metallic 
Pig  iron  (spot  value)  long  tons 

11,773,934 
54  438  000 

$116,557,000 
32  118  400 

25,781,361 
56  514  700 

$529,958,000 
37  299  700 

Gold,  coining  value  troy  ounces 
Copper,  value  at  New  York  City   pounds 
Lead,  value  at  New  York  City  short  tons 
Zinc,  value  at  New  York  City  short  tons 
Quicksilver,  value  at  San  Francisco  flasks 
Aluminum,  value  at  Pittsburg  pounds 
Antimony,   value    at   San   Fran- 
cisco          short  tons 

3,118,398 
526,512,987 
222,000 
115,399 
31,092 
5,200,000 

3,238 

64,463,000 
61,865,276 
16,650,000 
10,385,910 
1,188,627 
1,716,000 

532,101 

4,374,827 
868,996,491 
365,166 
223,745 
21,567 
17,211,039 

2,022 

90,435,700 
173,79,),300 
38,707,596 
26,401,910 
828,931 
4,926,948 

622  046 

Nickel,  value  at  Philadelphia  pounds 
Tin     pounds 

11,145 

3,956 

33285 

Platinum,  value  (crude)  at  New 
York  City                                          troy  ounces 

225 

1  913 

357 

10  589 

Total  value  of  metallic  products    

Non-metallic  (Spot  Values) 
Fuels  : 
Bituminous  coal  short  tons 
Pennsylvania  anthracite                      long  tons 

166,593,623 
47  663  076 

305,482,183 

132,608,713 
75  414  537 

394,759,112 
76  432  421 

903,024,005 

451,214,842 
163  584  056 

Natural  gas  

15,296,813 

52  866  835 

Petroleum  barrels 

55,364,233 

44,193,350 

166,095,335 

120,106,749 

Total  fuels    

267  513  422 

787  772  482 

123  592  445 

305  847  526 

Abrasive  materials  
Chemical  materials 

— 

1,098,784 
12  387  719 

— 

1,646,919 
30  759  684 

Pigments  

__ 

2,962  055 

• 

9  761  595 

Miscellaneous  

— 

10,236,246 

— 

30,376,985 

Total  value  of  non-metallic  mineral  products  . 
Total  value  of  metallic  products  
Estimated  value  of  mineral  products  unspeci- 
fied            

— 

417,790,671 
305,482,183 

1  000  000 

— 

1,166,165,191 
903,024,005 

100  000 

Grand  total  

724  272  854 

2  069  289  196 

TOTAL  VALUE  OF  MINERAL  PRODUCTS  SINCE  1880 


1880 

1881 

1882 

1883 

Metallic  products  

$185  649  163 

$187  549  908 

$214061  009 

$196  547  259 

Non  -metallic  products  

173,279,135 

206  783  144 

231  340  150 

243,812,214 

Unspecified    

6,000,000 

6.500,000 

6,500,000 

6,500,000 

Total  

$364,928,298 

$400  833  052 

$451,901,159 

$446,859,473 

1884 

1885 

1886 

1887 

Metallic  products  

$179  230  899 

$172  491  087 

$203,249,225 

$236,598,254 

Non-metallic  products 

221  879  506 

241  312093 

230  088  769 

270,989,420 

Unspecified    

5,000,000 

5,000,000 

800,000 

800,000 

Total  

$406  110  405 

$418  803  180 

$434  137  994 

$508,387,674 

THE  COST  OF  MINING 


1888 

1889 

1890 

1891 

$237,574,422 

$247,768,701 

$292,649,877 

$282  617  183 

Non-metallic  products  

286,150,114 

282,623,812 

312,826,503 

321,767,846 

900,000 

1,000,000 

1,000,000 

1  000  000 

Total                             

$524,624,536 

$531,392,513 

$606,476,380 

$605,385,029 

1892 

1893 

1894 

1895 

$281  514  539 

$219  436  649 

$185  804  594 

$245  874  431 

340,028,842 

323,257,318 

362  570  173 

393  897  097 

Unspecified    

1,000,000 

1,000,000 

1,000,000 

1,000,000 

Total  

$622,543,381 

$543,693,967 

$549,374,767 

$640,771,528 

1896 

1897 

1898 

1899 

$251  445  519 

$265  209  975 

$305  482  183 

$487  831  631 

Non-metallic  products  

388,098,702 
1,000,000 

380,782,607 
1,000,000 

417,790,671 
1  000  000 

526,524,074 
1  000  000 

Total 

$640  544,221 

$646  992  582 

$724  272  854 

$1  014  355  705 

1900 

1901 

1902 

1903 

Metallic  products         .       

$511  632891 

$480  006  859 

$599  916  009 

$583  433  948 

Non-metallic  products  

594,398,501 

660,993,170 

722,186,708 

907  495  032 

1,000,000 

1,000,000 

1  000  000 

1  000  000 

Total      

$1,107,031,392 

$1,142,000,029 

$1  323  102  717 

$1  491  928980 

1904 

1905 

1906 

1907 

$502  149  624 

$702  453  101 

$886  110  856 

$903  024  005 

Non-metallic  products  

860522)721 

400  000 

922,282,724 
400  000 

1,017,696,178 
200  000 

1,166,165,191 
100  000 

Total                     

$1  363  072  345 

$1  625  135  835 

$1  904  007  034 

$2  069  289  196 

I  have  not  been  able  to  cover  the  whole  field  of  the  mining 
business,  but  I  shall  endeavor  to  present  some  idea  of  the  busi- 
ness as  applied  to  coal,  iron,  gold,  copper,  silver,  lead,  and  zinc. 
These  materials  amount  to  over  70  per  cent,  of  the  total  mineral 
output  and  it  is  fair  to  believe  that  the  principles  governing  the 
exploitation  of  this  much  will  apply  also  to  the  remainder. 

The  above  tables  should  not  be  dismissed  without  some 
further  comment.  They  emphasize  not  only  the  importance  of 
the  mining  business,  but  also  its  increasing  importance.  The 
mineral  output  per  capita  in  the  United  States  in  1880,  which 
was  a  boom  year,  was  less  than  $7.50,  while  in  1907  it  had  risen 
to  $25.  There  is  not  the  slightest  indication  that  the  increase 


VALUE    OF    MINING    PROPERTY  5 

in  the  use  of  minerals  has  anywhere  nearly  reached  its  limits. 
On  the  contrary,  the  development  is  in  full  career  and  is  likely 
to  continue  for  many  decades.  So  long  as  the  United  States 
has  two  thousand  billion  tons  of  accessible  coal  within  its  bor- 
ders and  vast  tracts  of  irrigable  and  swamp  lands  still  undevel- 
oped and  a  rapidly  increasing  population  daily  becoming  more 
accustomed  to  increasing  standards  of  efficiency  and  an  increas- 
ing scale  of  comfort,  we  may  look  forward  to  great  increases  of 
business.  There  is  no  other  field  in  which  activity  promises  to 
be  more  widely  extended  than  in  mining  which  furnishes  the 
basis  for  most  of  the  characteristic  manufactures  of  modern  civ- 
ilization. 

VALUATION  OP  ESTABLISHED  MINING  CONCERNS 

It  is  in  this  particular  field  also  'that  the  process  of  consoli- 
dation of  unit  enterprises  into  larger,  more  stable,  and  more 
effective  groups  is  most  noticeable.  It  is  inevitable  that  this 
process  will  mean  an  extension  of  ownership  among  a  larger 
number  of  holders,  concurrent  with  the  concentration  of  man- 
agement in  proportionately  fewer  but  more  effective  hands. 
The  great  enterprises  of  the  present  are  usually  far  beyond  the 
resources  of  any  individual  capitalist.  Shares  of  most  of  our 
great  corporations  are  divided  among  many  thousand  people. 
The  expansion  of  this  kind  of  ownership  is  as  inevitable  as  the 
expansion  of  business  itself.  I  regard  it,  therefore,  as  an  im- 
portant function  of  the  mining  engineer  and  mining  investor  of 
the  immediate  future  to  study  and  fix  the  valuation  of  industrial 
shares,  based  partly  or  wholly  on  mining  enterprises,  as  well  as 
of  single  mining  properties.  My  purpose  is  to  explain  how  the 
valuation  of  mining  properties  depends  on  some  cardinal  prin- 
ciples^  that  are  easily  understood  in  general  terms,  but  may  easily 
be  obscured  in  concrete  cases.  These  principles  of  course  apply 
not  to  speculation  but  to  serious  investment.  The  basic  factors 
are:  first,  average  market  prices;  secondly,  average  costs;  thirdly, 
the  life  of  the  mine.  While  each  of  these  factors  is  so  easily 
understood  as  to  be  practically  axiomatic  their  application  always 
involves  questions  that  are  not  always  easy  to  answer. 

Average  Prices.  —  The  average  price  of  any  article  for  a  period 
of  years  in  the  past  is  usually  very  easy  to  determine,  but  we 
are  immediately  confronted  with  the  fact  that  prices  determined 


6  THE  COST  OF  MINING 

with  accuracy  for  certain  periods  of  years  do  not  agree  with  equally 
well  determined  prices  of  other  periods  of  years.  For  example, 
the  price  of  copper  for  the  last  fifty  years  has  averaged  some- 
thing under  16  cents  per  pound.  For  the  last  twenty  years  it 
has  averaged  13.85  cents  per  pound,  while  for  the  last  ten  years 
it  has  averaged  15.82  cents  per  pound.  Now  since  the  question 
is  not  what  prices  have  been  in  the  past,  but  what  they  are  likely 
to  be  in  the  future,  it  is  evident  that  we  must  select  from  these 
various  averages  the  one  that  seems  most  likely  to  conform  with 
the  probable  conditions  ahead  of  us.  Such  a  selection  involves 
the  consideration  of  a  great  variety  of  subjects.  A  thing  that 
throws  most  light  on  this  problem  is  the  course  of  prices  them- 
selves. If  these  prices  are  plotted  in  a  curve  for  a  long  period 
of  years  it  will  be  found  that  there  have  been  a  series  of  high-price 
periods  followed  by  another  series  of  low-price  periods.  It  may 
and  will  make  a  good  deal  of  difference  with  our  prediction  of 
the  future  whether  the  crest  of  each  high  wave  is  higher  than 
that  of  the  one  preceding  it,  and  the  low  wave  not  quite  so  low 
as  the  one  that  preceded  it.  If  we  find  such  a  state  of  affairs, 
we  are  probably  justified  in  concluding  that  the  average  price 
of  such  a  commodity  is  rising. 

One  will  be  influenced  in  like  manner  by  the  demand, for  a 
given  article  in  comparison  with  other  articles.  If  we  should 
find,  for  instance,  that  the  amount  of  lead  used  in  1890  was  equal 
to  the  amount  of  copper  used,  while  in  1900  only  one-half  as  much 
was  used,  and  in  1910  only  one-quarter  as  much,  it  would  seem 
to  be  well  worth  while  to  look  into  the  reasons  for  such  changes. 
These  reasons  might  be  complex  and  obscure.  It  might  be  that 
they  would  argue  either  for  higher  or  for  lower  prices  for  either 
of  the  articles  in  question.  If  the  consumption  of  lead  were 
proportionately  diminished,  it  might  be  explained  by  a  deficient 
supply  which  would  argue  for  higher  prices,  or  it  might  be  due 
to  a  substitution  of  other  materials  for  the  uses  to  which  lead 
had  been  put;  which  would  argue  for  lower  prices.  It  is  well  to 
point  out  that  these  are  precisely  questions  that  people  engaged 
in  trade  are  constantly  considering.  But  for  the  man  who  is  look- 
ing for  general  tendencies  and  not  for  the  conditions  of  the  moment 
the  ideas  of  such  people  are  too  much  fixed  on  near  considera- 
tions. Their  eyes  are  apt  to  focus  not  on  the  developments  of 
a  decade,  but  on  those  of  a  week  or  month.  It  is  against  the 


VALUE    OF    MINING    PROPERTY  7 

judging  of  great  and  stable  securities  on  these  momentary  con- 
siderations that  it  is  most  necessary  to  protest. 

Average  Costs.  —  The  determination  of  average  costs  is  the 


1876   1878 


1888   1890   1892   1894 

FIG.  1 


1900   1902   1901   1906   1008 


8  THE  COST   OF   MINING 

principal  matter  discussed  in  this  volume.  It  is  necessary  to 
introduce  here  a  consideration  that  is  easily  overlooked,  namely, 
that  if  prices  vary,  costs  vary  also,  but  not  to  the  same  extent. 
The  value  of  securities  is  too  often  affected  by  a  hasty  conclu- 
sion on  the  part  of  the  public  that  a  rise  in  prices  will  go  wholly 
to  profits,  or  that  a  drop  in  prices  will  be  taken  wholly  out  of 
profits.  As  an  illustration  of  this  fallacy  I  reproduce  here  an 
article  published  in  the  beginning  of  1908  in  the  Engineering 
and  Mining  Journal  on  the  Vanishing  Point  of  Profits  : 

CONCURRENT  FLUCTUATION  OF  COSTS  AND  PRICES 

"The  Federal  Mining  and  Smelting  Company's  report  for  1907 
shows  a  net  profit  of  $2,232,249  after  taking  out  a  "  development 
account"  of  $300,000.  This  came  from  130,373  tons  of  concen- 
trates containing  3,689,298  oz.  of  silver  (worth  68  cents  per 
ounce,  or  $2,508,722.64)  and  59,746  tons  of  lead  (worth  $116 
per  ton,  or  $6,930,536),  the  total  gross  value  being  $9,439,258.64). 
On  this  output  the  profits  amount  to  23.6  per  cent,  and  the 
costs  must  therefore  be  76.4  per  cent.,  giving  an  apparent  cost 
for  lead  of  4.43  cents  per  pound  and  for  silver  of  51.95  per 
ounce. 

"At  first  thought  one  is  apt  to  assume  that  with  costs 
the  same  the  company  would  receive  no  profit  unless  the  prices 
were  above  4.43  cents  for  lead  and  51.95  cents  for  silver.  How 
false  such  an  assumption  would  be  appears  from  the  follow- 
ing: 

"  The  Coeur  d' Alene  mining  companies,  of  which  this  is  one,  do 
not  smelt  their  own  concentrates  but  sell  them  to  smelting  com- 
panies under  contracts  somewhat  as  follows:  The  smelter  pays 
for  90  per  cent,  of  the  lead  at  90  per  cent,  of  the  New  York  price, 
or  81  per  cent,  of  the  full  quantity  and  price  when  lead  sells  at 
4.10  cents  per  pound  or  under.  When  the  price  rises  above  4. 10 
cents  per  pound  the  smelter  pays  81  per  cent,  and  one-half  the 
additional  price.  Thus  if  lead  sells  at  $4.50  per  pound  the  smel- 
ter pays  81  per  cent,  of  4.10  plus  one-half  of  0.40  =  3.251.  The 
smelter  pays  for  95  per  cent,  of  the  full  value  of  the  silver.  A 
freight  and  treatment  charge  of  $16  a  ton  is  deducted  from  the 
value  of  average  concentrates.  Applying  this  rule  to  the  out- 
put for  1907  we  find  that  the  cost  of  producing  concentrates 
was  $23.39  a  ton,  thus: 


VALUE  OF  MINING   PROPERTY 

Selling  Price  Contract  Price 

Lead 5.80 4.171 

Silver 68.00 64.60 

916.54  Ib.  lead  at  4.171  cents $38.23 

28.298  oz.  silver  at  64.60  cents    .  18.28 


Total  value  per  ton  56.51 

Freight  and  treatment  charge 16.00 


$40.51 

130,373  tons  at  $40.51 $5,281,410.23 

Profits    2,232,249.00 


Total  cost  of  production 3,049,161.23 

$3,049,161.23    $23.39  cost  per  ton  produced 

130,373 

"  Now  let  us  see  what  would  happen  to  the  Federal  Mining 
and  Smelting  Company  were  the  prices  reduced  to  the  point 
where  profits  apparently  vanish  according  to  1907  experience. 
The  concentrates  contained:  lead,  45.827  per  cent.,  916.54  Ib., 
and  silver,  28.298  oz.  per  ton.  The  value  is  figured  as  follows: 

Selling  Price  Contract  Price 

Lead 4.41 3.426 

Silver 51.95 49.353 

916.54  Ib.  lead  at  3.426  cents $31.40 

28.298  oz.  silver  at  49.353  cents   .  13.97  k 


Total  value $45.37 

On  this  our  costs  are : 

Freight  and  treatment  charge  $16.00 

Mining  and  milling    23.39 


$39.39 

"  We  have  a  profit  remaining  of  $5.98  per  ton.  This  on  130,373 
tons  would  be  $779,630.54  or  34.9  per  cent,  of  the  profit  at  1907 
prices.  On  this  basis  we  may  figure  the  real  vanishing  point 
for  lead  as  follows: 

"Let  the  silver  price  remain  stationary  and  we  shall  have  in 
our  concentrates  silver  worth  $13.97.  Our  cost  is  $39.39;  there- 
fore, 916.54  Ib.  of  lead  must  be  worth  $25.42  or  2.773  cents  per 
pound.  But  as  this  is  only  81  per  cent,  of  the  selling  price  the 
latter  will  figure  3.421  cents.  It  would  seem,  therefore,  that  we 
have  reached  the  vanishing  point  of  profits  as  far  as  the  Federal 


10  THE  COST  OF  MINING 

Mining  and  Smelting  Company  is  concerned  with  lead  at  3.421 
cents  and  silver  at  51.95  cents  at  New  York. 

"  But  this  deduction  may  also  be  wrong,  for  the  company  has  a 
chance  to  select  its  ores  and  produce  a  higher  grade  product. 
Suppose  it  produces  from  its  more  favorable  mines  only  65,000 
tons  of  concentrates  instead  of  130,373  tons,  and  that  the  selected 
concentrates  carry  56  per  cent,  lead  and  38  oz.  silver.  Suppose 
this  ore  cost  10  per  cent,  more  for  mining  and  milling  and  12.5 
per  cent,  more  for  freight  and  treatment  and  we  have  a  cost  of 

Mining  and  milling    $25.75 

Freight  and  treatment    18.00 

43.73 
"But  the  ore  will  be  worth  as  follows: 

Lead,  1120  pounds  at  2.773  cents $31.06 

Silver,  38  ounces  at  49.353  cents 18.75 


$49.81 

"Thus  we  have  a  profit  of  $6.08  still  or  $395,200,  and  in  addi- 
tion the  company  is  keeping  in  its  mines  a  very  large  amount  of 
ore  that  may  be  available  at  better  prices.  With  the  above  grade 
of  concentrates,  supposing  that  silver  remains  the  same,  the  van- 
ishing point  of  profit  on  lead  will  be  reached  at  2.230  cents  by 
contract  or  2.753  cents  at  New  York. 

"  Even  yet  we  have  not  reached  the  limit  of  the  company's 
resources.  It  is  safe  to  say  that  if  lead  had  to  be  sold  at  3  cents 
per  pound,  supplies  to  the  mines  would  be  cheaper  and  wages 
could  be  reduced." 

GENERAL  PRINCIPLES  OF  RELATION  OF  COST  TO  PRICE 

A  simpler  explanation  of  the  point  explained  here  may  be 
taken  from  the  following  considerations:  A  normal  price  for  cop- 
per may  be  assumed  to  be  15  cents  a  pound.  Let  us  suppose 
that  a  company  under  ordinary  conditions  can  produce  copper 
for  10  cents  a  pound,  making,  therefore,  a  normal  profit  of  5 
cents.  Let  us  suppose  that  copper  goes  up  to  20  cents  a  pound 
and  analyze  roughly  the  conditions  which  would  take  place 
under  such  a  rise  of  price  and  the  effect  of  those  conditions  on  the 
cost  of  production. 


VALUE  OF  MINING   PROPERTY  11 

Such  a  considerable  rise  of  price  could  only  be  due  to  a  defi- 
ciency  in  the  supply.  Apart  from  the  cutting  off  of  important 
sources  of  supply  by  war  or  other  calamity,  generally  this  defici- 
ency must  be  caused  either  by  a  shortage  of  ore  or  by  a  shortage  of 
labor  or  by  both.  In  the  case  of  an  individual  mine  a  shortage  in 
the  supply  of  ore  would  naturally  mean  either  impending  exhaus- 
tiori  or  an  insufficient  amount  of  development.  In  an  ordinary 
mine  the  volume  of  copper  could  be  increased  by  utilizing  some  low- 
grade  ores  which  would  not  ordinarily  be  worth  working.  Under 
the  stimulation  of  a  higher  price  the  management  would  natu- 
rally utilize  these  low-grade  ores  which  it  could  not  work  at  10 
cents  or  even  at  15  cents  copper.  It  follows  as  a  natural  and 
almost  inevitable  result  that  each  mine  would,  at  20  cents  cop- 
per, undertake  the  working  of  a  proportion  of  lower  grade  stuff 
at  very  much  increased  cost. 

But  the  mere  undertaking  of  increased  production  implies 
an  increased  use  of  labor.  Both  the  efficiency  and  the  supply  of 
labor  are  variables.  The  efficiency  generally  depends  on  the  supply. 
Where  an  enterprise  is  well  established  and  wages  are  high  the  num- 
ber of  miners  is  apt  to  exceed  by  a  certain  percentage  the  demand. 
In  other  words,  there  is  always  a  number  of  men  looking  for  a 
job.  The  existence  of  a  crowd  of  unemployed  men  always  acts 
as  a  spur  to  the  exertion  of  those  who  are  fortunate  enough  to 
have  jobs.  The  sudden  expansion  of  the  business  will  take  away 
the  surplus  of  labor.  The  men  who  come  out  of  the  shafts  at 
night  no  longer  see  their  employment  threatened  by  competi- 
tion. They  accordingly  take  things  easier  and  the  immediate 
result  is  a  lowering  of  efficiency.  This  means  an  increase  in 
cost.  Sometimes  it  means  a  very  great  increase  of  cost. 

If  the  enterprise  is  not  paying  a  rate  of  wages  sufficient  to 
cause  an  over-supply  of  labor  under  normal  conditions,  then  any 
attempt  to  increase  the  scale  of  operations  will  be  immediately 
thwarted  by  lack  of  men  to  do  the  work.  If  the  company  finds 
it  necessary  under  such  conditions  to  increase  its  operations  it 
must  first  secure  an  increased  supply  of  labor.  The  usual  way 
out  of  such  a  difficulty  is  to  raise  the  wages. 

Furthermore,  if  copper  is  scarce  and  in  great  demand  it  is 
usually  a  corollary  that  other  products  are  scarce  and  in  great 
demand.  Very  likely  the  railroads  will  be  congested  with  freight; 
manufacturers  of  machinery  overcrowded  with  orders.  These 


12  THE  COST  OF  MINING 

are  all  factors  that  increase  cost.  A  mining  company  wishing 
to  get  out  a  large  output  at  20  cent  copper,  when  it  usually 
gets  only  15  cents,  finds  itself  under  a  drain  of  heavy  expense, 
bidding  up  prices  of  labor  and  supplies  of  all  kinds  in  order  to 
accomplish  its  purpose.  In  extreme  cases  it  is  quite  probable 
that  the  cost  is  so  much  increased  by  these  factors  as  to  absorb 
the  whole  advantage  of  the  increased  price.  That  a  certain 
proportion  will  be  absorbed  may  be  considered  inevitable. 

The  phenomenon  of  such  increases  of  cost  through  such  con- 
ditions of  trade  as  have  been  described  is  familiar  to  any  busi- 
ness man  who  has  lived  through  one  or  two  panics.  When  you 
see  in  the  newspapers  or  in  reports  of  industrial  concerns  com- 
plaints of  a  shortage  of  labor  arid  the  inefficiency  of  labor  you 
may  prepare  for  a  panic. 

It  is  a  corollary  from  the  same  considerations  that  in  periods 
of  depression  costs  will  be  reduced.  Let  us  suppose  that  our 
copper  company  which  has  been  used  to  15-cent  copper  finds  itself 
unable  to  sell  for  more  than  11  cents.  This  must  mean  that  the 
demand  for  copper  has  diminished.  It  is  no  longer  necessary  to 
produce  so  much.  There  is  no  longer  the  necessity  for  active 
development.  Copper  that  is  needed  can  be  produced  from 
selected  ores.  Since  fewer  men  will  be  needed  the  work  will  be 
done  by  selected  men  who  will  work  under  a  greatly  increased 
stimulus  of  competition.  Wages  may  be  reduced.  The  cumu- 
lative effects  of  such  conditions  may  mean  that  the  company 
which  has  produced  copper  normally  at  10  cents  may  produce  it 
for  a  period  at  8  cents  or  even  less  and  of  course  find  a  consider- 
able margin  of  profit. 

REDUCTION  OF  COSTS  PER  TON  NOT  A  SIGN  OF  PROSPERITY 

Also  we  should  not  fail  to  note  another  general  tendency  in 
every  important  mining  enterprise,  and  that  is  the  tendency  for 
costs  to  become  reduced  as  time  goes  on.  In  part  this  tendency 
is  due  to  general  improvements  in  machinery  and  methods,  new 
inventions,  better  transportation  facilities,  etc.,  which  the  indi- 
vidual enterprise  shares  with  the  industry  at  large.  But  the 
larger  part  comes  from  the  settling  down  of  the  enterprise  itself 
to  a  steady  gait,  to  its  better  organization,  to  the  better  results 
secured  from  labor,  and  usually  to  a  larger  scale  of  operation 
whereby  the  unit  cost  of  production  is  reduced  by  increasing  the 


VALUE   OF  MINING   PROPERTY  13 

number  of  tons  by  which  the  fixed  items  on  the  cost  sheet  are 
divided.  It  is  furthermore  to  be  noted  that  a  diminished  cost 
per  ton  due  to  these  causes  hardly  ever  results  in  an  increased  profit 
per  ton  when  the  price  of  the  product  remains  constant  or  even 
when  it  increases.  Many  reasons  bring  about  this  result,  but 
the  most  important  undoubtedly  is  the  equally  general  tendency 
to  a  reduction  with  time  in  the  metallic  content  of  the  ton  of  ore. 
This  in  many  cases  comes  from  an  actual  impoverishment  with 
depth,  which  forces  the  adoption  of  better  methods,  resulting  in 
lower  costs  through  the  inexorable  necessity  of  diminishing 
returns.  The  Calumet  &  Hecla  is  a  conspicuous  example  of  the 
achievement  in  the  last  ten  years  of  lower  costs  under  the  neces- 
sity imposed  by  a  fall  of  one-third  in  the  yield  of  its  ore.  But 
the  enlarged  scale  of  operation  itself  works  in  the  same  direc- 
tion even  more  effectively.  The  mill  or  reduction  works  is  nearly 
always  overbuilt  for  the  ore  developed.  To  get  a  low  cost  per 
ton  it  must  be  operated  to  its  capacity.  This  puts  a  strain  on 
the  mine,  with  the  result  that  in  order  to  keep  up  the  tonnage 
certain  stopes  are  worked  which  yield  rock  from  which  only  a 
small  profit  or  none  at  all  is  realized.  Furthermore,  in  many 
mines  with  ores  of  several  grades  the  lowering  of  costs  automat- 
ically, as  it  were,  enlarges  the  available  tonnage  that  may  be 
handled  with  some  profit,  the  effect  being  precisely  the  same  as 
an  increase  in  the  price  of  the  product.  This  result  is  shown  very 
clearly  by  several  of  the  newer  Lake  Superior  Copper  Mines, 
where  an  enlargement  of  the  mill  and  of  operations  generally 
has  resulted  not  only  in  a  diminished  cost  per  ton,  but  also  in  a 
diminished  yield  per  ton.  It  is  also  conspicuously  shown  by 
most  of  the  gold  mines  on  the  Rand. 

These  considerations  may  be  summed  up  in  a  few  words.  A 
diminished  metal  content  in  the  ton  of  ore  makes  it  necessary  to 
reduce  costs,  and  a  reduced  cost  per  ton,  which  always  comes 
with  time  and  enlarged  operations,  permits  the  handling  at  a 
profit  of  lower  and  lower  grade  ore.  Therefore,  quite  independ- 
ently of  the  course  of  prices,  we  have  a  tendency  for  cost  and 
metallic  content  per  ton  to  fall  together,  and  the  net  result  of 
this  tendency  almost  invariably  is  a  diminished  profit  per  ton. 

From  these  considerations  it  will  appear  that  there  is  no  great 
danger  in  calculating  on  average  costs  bearing  a  certain  propor- 
tion to  average  prices.  I  feel  like  insisting  that  the  only 


14  THE   COST    OF    MINING 

rational  way  of  calculating  mining  profits  is  to  consider  both 
with  the  greatest  possible  care. 

In  this  connection  I  wish  to  point  out  that  in  calculating 
costs  great  attention  must  be  given  to  capital  charges  as  well  as 
to  operating  charges.  Undue  attention  to  details  of  cost  and 
too  much  attention  to  statements  covering  single  months  or  years 
are  apt  to  befog  one's  vision  as  to  the  real  proportion  of  capital 
expenses.  This  is  an  error  into  which  I  have  been  particularly 
careful  not  to  fall. 

In  the  discussion  of  costs  to  be  presented  in  the  following 
chapters  I  have  given  great  attention  to  the  problem  of  enter- 
ing in  capital  or  construction  costs  in  due  and  fair  proportions. 
It  seems  worth  while  to  state  at  the  outset  that  in  the  metal 
mines  of  the  United  States  .the  total  cost  for  the  life  of  a  mine 
is  apt  to  exceed  the  operating  charges  from  20  per  cent,  to  40  per 
cent. 

NATURE  OF  MINING  INVESTMENTS 

Mining  companies  may  be  divided  into : 

I.  Those  which  own  a  single  mine  confined  to  a  single  orebody 
or  a  definite  tract. 

II.  Those  that  own  various  mines  each  with  its  individual 
capabilities  for  expansion. 

III.  Those  that  combine  mining  with  other  business  such  as 
transportation,  smelting,  or  manufacturing. 

It  should  be  plain  that  these  variations  afford  a  great  range 
of  considerations  from  simple  to  complex,  and  that  there  is  room 
for  the  exercise  of  much  talent  and  experience  in  the  appraisal 
of  the  earning  power  of  a  property  or  of  a  company.  In  the 
case  of  a  circumscribed  property  it  is  often  possible  to  fix  a  valu- 
ation from  purely  physical  considerations;  but  in  the  case  of 
corporations  doing  a  general  mining  business  there  are  brought 
into  prominence  the  technical  and  financial  ability  of  the  man- 
agement and  the  financial  state  of  the  corporation.  By  the  last 
consideration  we  mean  whether  it  is  in  debt  or  not  and  whether 
its  indebtedness  can  easily  be  disposed  of,  or  whether  the  debts 
will  drown  the  earning  power  of  the  property  rendering  the  equity 
of  it  only  nominal  value. 

Now  in  the  case  of  mining  property  of  all  kinds  there  is  one 
salient  fact  that  should  never  be  forgotten  for  a  moment,  namely, 


VALUE  OF  MINING   PROPERTY  15 

that  it  is  a  wasting  asset  which  is  always  in  process  of  distribution. 
This  is  true  whether  we  are  to  consider  only  a  single  producing 
unit  or  a  vast  aggregate  of  such  units. 

A  mine  has  been  likened  to  a  bank  account.  The  analogy 
with  an  account  in  a  going  bank  is  imperfect,  because  ^such  an 
account  may  be  swelled  by  new  deposits,  while  new  ore  cannot 
be  added  to  that  which  a  mining  property  already  possesses, 
although  the  actual  amount  may  not  be  known  until  the  prop- 
erty is  exhausted.  With  an  account  in  a  bank  being  wound  up 
by  a  receiver,  however,  the  analogy  is  absolute.  The  receiver, 
as  he  realizes  on  the  assets,  pays  the  account  back  to  its  owner 
in  instalments  which  are  called  dividends.  Dividends  from  min- 
ing property  are  of  precisely  the  same  nature,  namely,  they  are 
not  interest  on  capital  which  remains  unimpaired,  but  are  the 
capital  itself  distributed  in  instalments.  When  the  last  asset  is 
realized,  the  payment  of  instalments  ceases  and  nothing  is  left. 

It  would  be  a  considerable  public  service  if  one  could  make 
clear  to  investors  the  difference  between  an  ordinary  investment 
and  a  mining  investment.  What  is  an  ordinary  investment? 
The  term  may  describe  real  estate,  railroad  securities,  mortgages, 
etc.,  in  which  the  property  is  permanent  and  in  which  it  is  as- 
sumed that  the  principal  will  remain  intact.  The  question  that 
determines  the  value  of  such  property  is :  What  annual  income 
does  it  yield? 

In  the  case  of  a  mining  property  two  concurrent  questions 
must  be  answered  in  order  to  determine  its  value:  What  will  be 
the  sum  total  of  dividends?  and  how  long  will  it  take  to  realize 
them? 

DETERMINATION  OF  PRESENT  VALUE  FROM  KNOWN  FACTORS 

If  these  questions  can  be  answered  it  is  easy  to  arrive  at  the 
value  of  the  property  as  an  investment.  The  general  principle 
at  the  root  of  the  matter  is  that  the  annual  dividends  must  yield 
a  good  annual  interest  on  the  sum  invested,  and  also  permit  a 
certain  sum  to  be  set  aside  each  year,  which  securely  invested  at 
compound  interest  will  repay  the  investment  when  dividends 
cease  on  the  exhaustion  of  the  mine. 

The  present  value  of  a  mining  property  may  be  expressed 
algebraically  as  follows: 

Let  A  =  number  of  tons  in  the  deposit;  let  x  =  number  of 


16  THE  COST  OF  MINING 

years  necessary  to  mine  this  tonnage;  and  therefore  A  =  yearly 

x 

tonnage  mined;  let  p  =  profit  per  ton;  let  y  =  yearly  sum  set 
aside  to  sink  the  investment;  let  d  =  rate  +  1  at  which  the  sink- 
ing fund  can  safely  be  invested.  Then,  —  =  yearly  profit;  — 

-  y,  yearly  dividend.     Therefore  the  present  value  is  the  sum 
on  which  this  dividend  is  a  fair  return,  or  if  z  is  the  rate  expected, 

fpA        \  100 
Present  value  =  f  — -  —  y  J  — • 

But  if  y  is  invested  every  year  at  compound  interest  the  sum  of 
these  investments  at  the  end  of  x  years  will  return  the  capital 
invested  now.  Hence 

Present  value  =  y  (d  +  d2  +  d3  +  dx) 
d(d*  -  1) 


From  these  two  values  of  the  present  value  we  find 

IQOjoA 
y  ~  x(zS  +  100) 

and  we  therefore  have 


Present  value  -  -  —  ........  (1) 


xz     \zS  +  100 


This  formula  will  be  easily  understood  if  we  use  it  to  work 
out  an  example.  The  Miami  Copper  Company  is  said  to  have 
an  orebody  containing  at  least  14,000,000  tons  of  ore  averaging 
2.8  per  cent,  or  56  Ib.  of  copper  to  the  ton.  Of  this,  80  per  cent. 
or  say  45  Ib.  per  ton  can  be  recovered  and  marketed  at  an  outside 
cost  of  9  cents  a  pound.  The  company,  which  is  capitalized  at 
600,000  shares,  is  said  to  have  enough  money  in  the  treasury  to 
bring  it  to  the  point  of  production  at  this  rate.  Let  us  assume 
that  the  deposit  is  worked  at  the  rate  of  700,000  tons  a  year,  and 
therefore  will  be  exhausted  in  20  years  if  no  more  ore  is  found  ;  that 
the  average  price  received  for  copper  during  this  period  will  be 


VALUE   OF  MINING   PROPERTY  17 

15  cents  a  pound;  that  the  interest  on  the  investment  should  be 
7  per  cent,  after  providing  for  a  sinking  fund,  and  that  the  sink- 
ing fund  can  be  securely  invested  at  4  per  cent,  compound  inter- 
est. With  these  data  what  is  the  present  value  of  the  stock? 
Let  us  make  the  computation  on  a  per  share  basis  in  order 
to  simplify  the  numerical  calculation.  The  annual  product, 
700,000  tons,  is  1.166  tons  per  share.  The  profit  per  pound  is  6 
cents,  which  on  a  saving  of  45  Ib.  per  ton  would  be  $2.70  a  ton,  or 
$3.148  per  share. 

S  =  LOiiL^Il  =  30.97 

,U4 

100X3.148 
y  =  100  +  7  X  30.97  = 

The  yearly  sum  set  aside  out  of  dividends  for  the  sinking  fund 
is  therefore  about  $1.00  a  share. 

100 
Present  value  =  (3.148  -  0.994)  -^  =  $30.78  a  share.     On 

the  assumptions  made  this  should  be  the  value  of  the  stock  when 
the  mine  and  plant  are  in  full  operation.  If  it  takes  two  years 
to  reach  that  condition  the  present  value  is  subject  to  two  years 
discount.  It  is  to  be  understood,  of  course,  that  this  example 
is  merely  illustrative,  and  the  conclusion  depends  wholly  on  the 
truth  of  the  assumptions. 

Two  other  principles  may  be  stated.  The  first  is  that  a 
mining  property  being  an  asset  in  process  of  liquidation,  the  more 
rapidly  (other  things  being  equal)  that  asset  is  distributed  and 
the  business  wound  up,  the  greater  its  present  net  value.  This 
principle  is  subject  to  two  reservations  or  limitations.  One  of 
these  reservations  is  that  it  cannot  generally  be  applied  on  a 
large  scale  in  the  case  of  any  mineral  product  except  gold  without 
flooding  the  market  and  depressing  the  price,  thus  defeating  its 
own  object.  The  other  limitation  is  the  cost  of  the  increased 
development  and  equipment  necessary  for  the  larger  product. 
To  develop  and  equip  a  property  for  a  production  of  2000  tons 
a  day  costs  more  than  for  1000  tons  a  day,  and  this  capital  expen- 
diture must  be  deducted  from  the  present  net  value.  The  capital 
expenditure  may  be  roughly  expressed  as  a  multiple  of  the  yearly 
product.  For  example,  taking  account  of  the  capital  expendi- 
ture our  equation  becomes 


18  THE  COST   OF  MINING 

Present  net  value  =  Present  value  -  Capital  expenditure. 


when  C  is  a  constant  sum  and  n  is  the  cost  per  ton  of  annua] 
product. 

Since  both  the  capital  expenditure  and  the  present  value 
increase  with  the  shortening  of  the  period  of  exhaustion  there 
must  be  some  period  of  exhaustion  for  which  the  difference 
between  them  or  the  present  net  value  will  be  greater  than  for 
any  other  period,  and  this  of  course  will  be  the  most  favorable 
period  for  which  to  develop  and  equip  the  mine.  For  purposes 
of  illustration  let  us  take  the  example  already  worked  out  - 
that  of  the  Miami  mine  —  and  assume  that  development  and 
equipment  costs  $4  a  ton  of  annual  product  and  that  C  = 
$200,000.  If  we  take  several  different  values  of  x  in  succession, 
say  3,  6,  9,  12,  and  15  years,  we  obtain  the  following  net  values: 

x    3  years;  value  per  share  ........................  $24.03 

x    6  years;  value  per  share  ........................    33.30 

x    9  years;  value  per  share  ........................    32.80 

x  12  years;  value  per  share  ........................    32.04 

The  most  favorable  period,  therefore,  would  be  somewhere 
between  6  and  9  years;  the  gain,  however,  over  a  longer  period 
is  small  on  account  of  the  large  sinking  fund  required,  and  might 
be  more  than  balanced  by  the  difficulty  of  getting  the  extra 
capital  necessary,  and  especially  by  the  danger  that  the  shorter 
period  of  realization  might  coincide  with  a  period  of  depressed 
prices.  This  of  course  would  not  apply  to  a  gold  mine  except 
favorably.  But  where  the  product  is  sold  on  a  variable  market 
it  is  undoubtedly  wiser  to  prolong  the  period  of  realization  over 
a  sufficient  period  to  include  the  crests  as  well  as  the  troughs  of 
waves  of  prosperity,  unless  it  can  be  made  to  cover  the  crests 
alone. 


CHAPTER  II 
FACTORS  GOVERNING  VARIATIONS 

What  the  cost  consists  of  —  Factors  divided  into  external  and  internal 
groups  —  External  factors:  labor,  supplies,  climate,  transportation, 
water  —  Internal  factors :  orebodies,  attitude,  concentrating  qualitites, 
smelting  qualities  —  Mining  and  metallurgical  losses  and  their  effects 
upon  costs  —  Elements  of  a  complete  cost  statement  —  Character  of 
actual  reports  —  Management  —  How  rich  mines  are  more  costly  to 
operate  than  low-grade  mines  —  Hoover's  theorem  on  the  ratio  of  treat- 
ment capacity  to  ore  reserves  —  Economy  and  speed  —  Private  manage- 
ment and  public  interest. 

IT  is  necessary  first  to  define  what  we  mean  by  the  cost  of 
mining.  It  may  be  divided  into  three  parts: 

(A)  The  use  of  capital  in  acquiring  the  opportunity  to  mine, 
i.e.,   ownership   of   ground,   or  leases.     Since  the  value   of  this 
kind  of  property  is  only  a  speculative  anticipation  of   profits 
to  be  won  by  operating,  and   is   moreover  often   appraised   in 
a  fanciful  or  even  dishonest  way,   I  prefer  to    leave   this  ele- 
ment out  of  the  discussion.     I  am  quite  aware,  however,  that 
as   a  matter   of  practical  finance   this  cost  must  generally  be 
considered. 

(B)  The  use  of  capital  for  equipping  and  developing  a  mine, 
for  providing  mills  and  smelters. 

(C)  Current   operating   costs,   including   taxes,   the   mainte- 
nance of  company  organization,  insurance,  litigation,  etc. 

For  present  purposes  I  select  B  and  C  and  my  definition  is: 
The  complete  cost  of  developing,  equipping,  and  working  out 
a  mine,  allowing  interest  on  the  capital  required  for  these  pur- 
poses until  it  is  returned  in  dividends. 

As  any  one  with  the  most  meager  acquaintance  with  the  sub- 
ject must  know,  the  cost  of  mining  at  different  places  is  subject 
to  great  variations.  I  am  not  sure  that  the  factors  governing 
these  variations  have  ever  been  fully  stated. 

A  general  division  may  be  made  between  factors  that  are 

19 


20  THE  COST  OF  MINING 

external  or  fortuitous  and  those  introduced  by  the  internal 
make  up  of  the  orebodies.  It  is  evident  that  no  quality  in  the 
deposit  itself  can  influence  any  of  the  following  groups  of  con- 
ditions : 

(1)  The  cost  and  quality  of  labor  and  supplies. 

(2)  The  climate,  altitude,  or  distance  from  populous  centers. 

(3)  The  hardness  of  surrounding  rocks,  the  amount  of  water, 
the  depth  from  surface. 

(4)  The  facilities  and  cost  of  transportation  to  milling  or 
smelting  centers  or  markets. 

All  of  the  above  conditions  vary  from  place  to  place  and 
introduce  differences  in  the  cost  of  mining,  though  not  such 
great  differences  (as  will  be  shown  later)  as  are  caused  by  the 
inherent  qualities  of  the  orebodies  themselves. 

COST  OF  LABOR  AND  SUPPLIES 

The  wages  in  the  mines  of  the  United  States  vary  between 
20  and  60  cents  an  hour.  Usually  the  difference  is  partly  made 
up  by  the  varying  efficiency  of  the  men.  Where  wages  are  low 
the  supply  of  labor  is  meager,  the  best  men  are  constantly  leav- 
ing for  more  favorable  localities,  those  employed  are  not  subject 
to  the  spur  of  a  keen  competition,  and  the  results  are  constantly 
disappointing.  On  the  other  hand,  where  wages  are  high,  the 
most  ambitious  and  intelligent  men  are  attracted  and  they  com- 
pete with  each  other  for  the  places. 

It  is  hard  to  fix  any  figure  for  the  compensation  thus  effected, 
but  it  would  perhaps  be  safe  to  say  that  one-half  of  the  appar- 
ent difference  is  made  up.  Some  authorities  will  say  it  is  nearly 
all  made  up.  Messrs.  Taylor  &  Brunton  tell  me  that  in  operat- 
ing sampling  mills  at  Cripple  Creek,  Colo.,  where  the  wages  are 
40  cents  an  hour,  and  at  Salt  Lake  City,  where  the  wages  are 
25  cents  an  hour,  there  is  but  little  difference  in  the  labor  cost 
per  ton  sampled.  If  we  assume  that  while  the  difference  in 
wages  is  represented  by  20  and  60,  and  the  difference  in  cost 
efficiency  by  40  and  60  (or  70  and  100),  we  find  that  the 
variation  in  labor  cost  is  only  about  30  per  cent,  from  the 
maximum.  Since  the  labor  accounts  generally  are  about  60 
per  cent,  of  the  total  current  cost  of  mining,  differences  in  wages 
are  not  likely  to  account  for  a  variation  of  more  than  18  per 
cent. 


FACTORS   GOVERNING  VARIATIONS  21 

In  the  world  at  large,  outside  of  the  United  States,  there 
may  be  instances  where  the  differences  in  wages  are  more  impor- 
tant than  within  the  United  States.  Nevertheless,  in  the  few 
important  mining  districts  of  which  I  have  any  knowledge,  such 
as  the  Transvaal,  India,  and  Mexico,  where  native  labor  is  em- 
ployed very  largely  at  very  low  rates,  it  is  well  known  that  the 
costs  are  not  lower  than  in  the  United  States  for  similar  work. 
It  appears  that  where  labor  is  very  low  there  is  little  or  no 
acquaintance  with  machinery  and  the  performance  per  man 
is  correspondingly  low.  Where  large  numbers  of  natives,  igno- 
rant of  all  civilized  mechanical  appliances,  are  employed  at  a 
large  plant,  they  must  be  supervised  by  white  men  who  do 
little  actual  work  and  get  wages  higher  than  those  they  receive 
at  home. 

In  the  English-speaking  countries  where  mining  is  an  important 
industry,  it  may  be  said  that  the  conditions  as  regards  labor  are 
almost  identical  with  those  of  the  United  States.  It  does  not 
appear  probable,  therefore,  that  my  conclusions  regarding  the 
variations  caused  by  wages  in  the  United  States  need  to  be  essen- 
tially changed  when  applied  to  the  important  producing  centers 
of  the  world  at  large.  Extreme  variations  must  be  confined 
largely  to  isolated  and  abnormal  localities. 

The  cost  of  supplies  affects  the  cost  directly.  The  important 
supplies  are  fuel,  timber,  explosives,  steel,  and  tools.  In  the 
United  States  the  price  of  these  commodities  does  not  vary 
enormously  among  the  important  mining  centers,  certainly  not 
much  more  than  50  per  cent,  from  the  maximum.  Since  the  col- 
lective cost  of  the  various  supplies  is  rarely  more  than  20  per 
cent,  of  the  total  current  mining  cost,  a  variation  of  50  per  cent, 
in  the  price  will  produce  a  difference  of  only  10  per  cent,  in  that 
cost. 

The  cost  of  supplies  in  the  world  at  large  is  apparently  sub- 
ject to  about  the  same  degree  of  difference  as  the  cost  of  labor, 
but  it  is  to  be  remarked  that  in  any  country,  such  as  India  and 
South  Africa,  where  the  price  of  labor  is  nominally  low,  the 
cost  of  supplies  is  usually  distinctly  higher  than  in  the  United 
States.  In  the  Transvaal,  for  instance,  Ross  E.  Browne  esti- 
mates that  the  additional  cost  of  supplies  as  compared  with 
California  accounts  for  approximately  10  per  cent,  of  the  total 
cost  of  mining. 


22  THE  COST  OF  MINING 

UNDERGROUND  CONDITIONS 

The  hardness  of  the  rock  is  likewise  a  comparatively  unimpor- 
tant factor.  In  any  case  the  hardness  affects  only  one  division 
of  the  underground  work;  namely,  breaking  the  ground.  The 
stability  of  the  ground  is  much  more  important  than  the  hard- 
ness. Timbering  is  often  an  important  item. 

Increase  in  depth  adds  something  to  the  cost  of  hoisting  and 
pumping,  but  it  is  to  be  remembered  in  this  connection  that 
if  a  mine  is  only  100  ft.  deep,  machinery  must  be  provided  for 
these  purposes  and  a  complement  of  men  employed  to  operate 
it.  As  depth  increases,  the  only  change  that  comes  in  is  the 
requirement  of  heavier  machinery  and  additional  power.  The 
increase  of  cost,  therefore,  is  far  from  being  proportional  to 
the  depth.  One  consequence  of  extreme  depth  that  might 
easily  be  overlooked  is  the  daily  cost  of  transporting  the  men 
to  and  from  their  working  places.  In  the  case  of  the  Calumet  & 
Hecla,  the  hoisting  engines  are  in  use  two  hours  each  shift  in 
lowering  the  men  and  hoisting  them  out  again.  Not  only  does 
this  represent  a  considerable  expense  in  itself  for  mere  hoisting, 
but  far  the  greater  part  of  the  time  of  the  workmen  for  this  period 
is  lost  to  the  company. 

The  temperature  of  underground  workings  often  becomes  a 
matter  of  considerable  importance.  A  high  temperature  may 
be  caused  by  the  climate,  or  by  great  depth,  or  by  the  presence 
of  hot  waters  or  heat-producing  chemicals.  It  is  only  in  the 
last  case  that  the  heat  can  be  called  an  inherent  quality  of  the 
orebody  itself.  There  have  been  cases  of  such  high  tempera- 
tures in  mines  as  almost  to  prevent  working  altogether,  but  ordi- 
narily temperatures  of  80  or  90°  F.  are  about  the  limit  reached 
in  important  mines.  Such  temperatures  affect  the  energies  of 
the  men  adversely,  although  men  grow  accustomed  to  them  and 
suffer  no  ill  consequences  in  the  way  of  health.  The  impor- 
tance of  this  factor  is  extremely  difficult  to  appraise  in  figures, 
although  in  the  case  of  the  Calumet  &  Hecla,  Anaconda,  and 
United  Verde,  to  cite  conspicuous  examples,  the  loss  of  effective- 
ness in  labor  through  this  cause  must  represent  annually  a  very 
large  sum. 

These  remarks  are  intended  to  apply  only  to  underground 
mines.  Where  the  work  is  done  wholly  upon  the  surface,  the 


FACTORS   GOVERNING   VARIATIONS  23 

facilities  for  working  are  so  much  superior  that  mines  of  this 
character  must  be  considered  separately. 

CLIMATE,  ALTITUDE,  AND  POPULATION 

The  influence  of  climate,  though  indirect,  is  powerful  through 
its  effect  on  human  life  and  effort.  Sometimes  in  places  where 
there  is  an  excessive  rainfall  or  excessive  heat  or  unhealthful 
conditions,  the  effect  may  be  to  limit  the  scope  of  operations. 
For  instance,  in  Ecuador,  South  America,  a  plant  has  been  run- 
ning 25  years,  but  on  account  of  the  climatic  influences  it  has 
never  been  possible  to  secure  more  than  about  60  effective  miners, 
although  the  economical  management  of  the  property  requires 
the  employment  of  several  times  as  many. 

Excessive  altitude,  and  great  distance  from  lines  of  trans- 
portation, place  similar  limitations  upon  enterprise.  Where 
several  factors  of  this  kind  are  present  at  the  same  locality,  the 
aggregate  effect  is  to  place  almost  unsurmountable  difficulties 
in  the  way  of  successful  operations,  but  as  a  general  rule  in  places 
where  important  mines  have  been  discovered,  most  of  these 
difficulties  have  been  overcome.  For  instance,  in  the  San  Juan 
region  of  Colorado,  and  in  the  Cerro  de  Pasco  in  Peru,  adequate 
transportation  facilities  have  been  provided  and  the  only  adverse 
conditions  still  remaining  are  the  altitude  and  disagreeable  cli- 
mate which  have  in  both  instances  a  pronounced  ill  effect  upon 
the  performance  of  the  labor. 

TRANSPORTATION  AND  MARKETING  THE  PRODUCT 

Transportation  facilities  may  be  described  as  adequate  when 
they  are  sufficient  to  handle  the  output  of  a  mine  and  to  deliver 
with  promptness  the  necessary  supplies;  but  adequacy  in  this 
sense  does  not  mean  cheapness.  Transportation  is  in  very  many 
cases  one  of  the  most  vital  elements  in  the  cost  of  mining.  This 
is  particularly  the  case  when  the  products  have  to  be  shipped 
considerable  distances.  In  the  case  of  coal  and  iron  it  is  a 
matter  of  common  knowledge  that  transportation  is  often  the  all- 
important  factor,  and  even  in  the  case  of  precious  metals  some- 
times the  cost  of  transporation  to  mills  and  smelters  equals,  if 
it  does  not  exceed,  the  cost  of  actual  mining.  The  intimate 
bearing  of  this  fact  upon  mining  methods  and  results  aside  from 


24  THE  COST  OF  MINING 

the  mere  question  of  transportation  cost  in  themselves  will  be 
described  later  on. 

Another  factor  that  is  often  of  considerable  importance  is 
the  commercial  matter  of  marketing  the  products.  This  is 
sometimes  done  by  contract  with  selling  agencies;  and  some- 
times by  the  company  itself.  In  either  case  there  is  to  be  taken 
into  condsideration,  in  addition  to  the  cost  of  marketing,  the 
success  achieved  in  disposing  of  satisfactory  quantities  of  the 
product.  It  is  in  this  respect  particularly  that  the  cost  of  min- 
ing may  be  greatly  influenced  by  this  factor  in  determining  the 
volume  of  operations. 

COINCIDENCE    OF   EXTERNAL   FACTORS 

One  would  scarcely  expect  that  all  these  various  factors 
would  move  in  unison,  i.e.,  that  they  should  all  be  equally  bad 
in  one  place  and  equally  good  in  another.  So  far  as  the  natural 
conditions  such  as  rock  hardness,  depth,  and  amount  of  water 
to  be  pumped  are  concerned,  it  is  indeed  extremely  unusual 
that  such  factors  are  at  a  given  place  at  either  extreme;  but  it 
must  not  be  forgotten  that  the  remaining  external  factors  have 
their  effect  through  the  efforts  of  man  himself.  If  the  mine  is 
situated  far  from  populous  centers  the  reason  is  apt  to  be  that 
the  climate  or  the  altitude  is  unfavorable.  This  generally  means 
that  labor  is  dear  and  inefficient,  supplies  costly,  transportation 
difficult  and  expensive.  These  factors  are  likely,  therefore,  to  be 
affected  together,  and  if  one  is  favorable  they  are  all  likely  to  be 
favorable  and  vice  versa. 

The  sum  total  of  cost  variations  that  may  be  due  to  the  coin- 
cidence of  these  external  factors  is  therefore  considerable  and 
is  sufficient  to  prevent  the  working  of  abundant  yet  valuable 
products  such  as  coal,  iron  ore,  or  salt  at  places  where  these  con- 
ditions are  all  bad.  It  may  be  said  that  the  above  factors  are 
those  which  as  a  rule  govern  the  variations  in  the  cost  of  low- 
priced  and  bulky  mineral  products. 

INTERNAL  FACTORS 

The  internal  factors  are:  (1)  The  size  and  attitude  of  the  ore- 
bodies  ;  (2)  the  relation  the  valuable  material  bears  to  the  enclos- 
ing gangue  or  material;  (3)  the  problems  involved  in  metallurgical 
treatment. 


FACTORS   GOVERNING   VARIATIONS  25 

These  factors  introduce  immense  differences  of  cost.  For 
instance,  in  gold  mining  we  find  that  the  Alaska-Treadwell  has 
mined,  treated,  and  marketed  its  ore  for  $1.48  per  ton,  while 
the  Camp  Bird  in  Colorado  producing  gold  ore  subjected  to  the 
same  process  costs  $12.50  per  ton.  The  wages  are  the  same, 
the  rock  is  of  the  same  hardness,  the  water  is  no  problem  in  either 
case,  the  method  of  mining  even  is  practically  the  same.  The 
general  management  of  the  Treadwell  is  probably  more  econom- 
ical than  that  of  the  Camp  Bird,  but  the  difference  is  not  to  bo 
laid  to  this  score.  The  difference  comes  in  the  factors  mentioned 
above  and  those  factors  are  so  important  that  they  are  worth 
a  more  extended  consideration. 

If  we  have  a  body  of  homogeneous  material  more  than  four 
feet  thick  and  continuous,  it  is  evident  that  the  mine  openings 
can  be  made  very  largely,  if  not  wholly,  in  the  stuff  to  be  ex- 
tracted. Practically  every  blow  struck  produces  ore.  But 
reduce  the  thickness  to  be  mined  to  one  foot  and  we  are  at  once 
confronted  with  the  necessity  of  taking  out  three  feet  of  worth- 
less material  for  one  foot  that  is  valuable,  besides  having  to  take 
pains  to  keep  them  separate.  Here  we  introduce  at  once  an 
enormous  proportion  of  wasted  expense  that  must  be  borne  by 
the  valuable  ore.  Now  break  the  continuity  of  the  deposit  and 
it  is  evident  that  openings  have  to  be  made  entirely  through 
waste  material  merely  to  find  and  open  up  the  scattered  bodies. 
This  evidently  increases  the  cost  still  more.  Now,  since  it  costs 
about  as  much  to  handle  one  kind  of  rock  as  another,  it  is  very 
evident  that  the  cost  of  handling  narrow  and  non-continuous 
orebodies  may  be  many  times  greater  than  the  cost  of  mining 
orebodies  large  enough  to  afford  room  to  work  in.  A  sort  of 
dead  line  is  established  by  a  thickness  of  approximately  four 
feet.  Orebodies  thicker  than  four  feet  are  only  moderately 
cheaper  to  handle  than  those  of  about  that  thickness. 

The  attitude  of  an  orebody  has  a  great  deal  to  do  with  the 
cost  of  extracting  it.  For  instance,  in  the  anthracite  coal-fields, 
in  Pennsylvania,  and  in  various  other  coal-fields,  the  beds  are 
thrown  into  a  succession  of  folds  with  constantly  varying  slopes. 
The  effect  of  this  is  double.  First  it  renders  more  difficult  the 
taking  of  the  material  from  the  working  places  to  the  haulage 
roads,  and  secondly  it  renders  necessary  a  large  amount  of  dead 
work  in  order  to  reach  the  various  parts  of  the  beds  and  also 


26  THE  COST  OF  MINING 

prevents  regular  systematic  working.  These  two  factors  are 
sufficient  to  introduce  a  great  increase  of  cost  over  that  of 
mining  a  flat  and  unbroken  seam. 

Faulting  of  the  beds  or  veins  and  the  occurrence  of  barren 
patches  introduce  complications  similar  to  those  caused  by 
folding,  but  very  much  more  variable  in  their  nature.  The  fold- 
ing of  the  formation  is  invariably  regional  and  is  felt  rather 
uniformly  by  all  of  the  mines  in  a  given  district,  while  a  series  of 
faults  may  affect  only  one  mine  in  a  group  and  while  that  mine 
may  have  just  as  good  ore  and  as  much  of  it  as  its  neighbors  its 
costs  will  be  higher. 

HOMOGENEITY  OF  ORE 

The  homogeneity  of  the  ore  is  a  factor  of  great  importance. 
This  quality  determines  whether  it  is  necessary  to  subject  to 
metallurgical  treatment  the  whole  or  only  a  part  of  an  orebody. 
If  only  a  part  need  be  so  treated  we  have  a  concentrating  ore. 
The  manner  in  which  the  valuable  mineral  lies  in  the  enclosing 
rock  determines  how  the  concentrating  must  be  done.  In  any 
case  the  process  of  concentration  involves  loss  and  expense,  and 
the  question  of  how  far  this  loss  and  expense  is  justified  depends 
on  the  cost  and  character  of  the  subsequent  metallurgical  treat- 
ment. 

The  cost  of  the  metallurgical  treatment  depends  primarily 
on  the  proportion  of  ore  that  must  be  treated.  This  proportion 
varies  at  different  mines  from  2  to  100  per  cent.  Obviously, 
where  only  2  per  cent,  must  be  treated  the  cost  of  treatment 
as  applied  to  the  whole  orebody  will  be  less  than  where  all  is 
treated.  The  inherent  metallurgical  problem  is  therefore  only 
reached  when  the  question  of  selection  is  settled. 

Low  COSTS   IN   MINING  MAY  MEAN   GREATER  EXPENSE 
ELSEWHERE 

The  above  seems  a  sufficient  explanation  of  the  fact  that  it 
is  necessary  to  a  discussion  of  mining  to  include  a  consideration 
of  the  processes  by  which  the  ore  is  to  be  treated.  It  is  not 
possible  to  run  a  mine  intelligently  without  achieving  whatever 
economy  there  may  be  in  dressing  the  ore  so  that  the  further 
handling  will  be  facilitated.  Efforts  to  make  " records"  of  low 
costs  per  ton  have  in  many  cases  actually  resulted  in  good  mines 


FACTORS   GOVERNING   VARIATIONS  27 

being  run  at  a  loss.  In  this  connection  I  can  do  no  better  than 
repeat  some  remarks  from  an  article  published  in  the  Engineering 
and  Mining  Journal  some  years  ago  on  "  Mining  Costs  at  Cripple 
Creek." 

"  Let  us  take  as  a  practical  example  a  body  of  10,000  tons  of 
ore,  running  1  oz.  gold  per  ton.  This  ore  can  be  shipped  with- 
out sorting  at  a  handsome  profit,  as  follows: 

Gross  value  of  ore $200,000 

Cost  of  mining  10,000  tons  at  $3  per  ton   $  30,000 

Freight  and  treatment,  $8.25 82,500 

Total  cost $112,500 


Profit $87,500 

"But  suppose  we  reject  half  of  this  ore  by  sorting.  By  so 
doing  we  throw  away  5,000  tons  that  will  average  $2.50  per  ton, 
or  $12.500.  The  cost  of  sorting,  at  50  cents  per  ton,  will  be 
$2,500  more.  Then  our  shipment  will  be  as  follows : 

5,000  tons,  at  $37.50  per  ton   $187,500 

Cost  of  mining  and  sorting,  $6.50  per  ton $  32,500 

Freight  and  treatment,  $11.25 56,250 

Total  cost $  88,750 


Profit $  98,750 

"In  other  words,  the  gross  receipts  in  this  case  have  fallen 
$12,500.  The  cost  of  mining  per  ton  is  more  than  twice  as  great; 
the  cost  for  freight  and  treatment  per  ton  is  $3  greater.  The 
apparent  showing  by  the  superintendent  is  very  bad;  but  never- 
theless he  has  made  for  the  company  $11,250  clear  profit  on  the 
transaction. 

"  In  the  first  case  our  total  cost  for  mining,  freight,  and  treat- 
ment is  only  $11.25  per  ton;  in  the  second  case  it  is  $17.75  per 
ton,  but  there  is  more  money  in  the  higher  cost.  This  is  an 
example  that  has  been  worked  out  in  practice." 

A  false  economy  often  results  also  from  mining  too  much  in 
a  mere  attempt  to  produce  a  greater  output  than  the  develop- 
ment of  the  mine  really  warrants.  This  invariably  results  in 
mining  waste  at  a  dead  loss,  but  as  this  loss  is  on  the  same  basis 
as  the  above,  there  seems  no  need  to  follow  the  discussion  further. 


28  THE  COST  OF  MINING 

EFFECT  OF  LOSSES  IN  DETERMINING  COSTS 

Mining,  milling,  and  smelting  losses  often  foot  up  to  a  total 
that  is  simply  alarming.  Now  since  it  is  almost  self-evident 
that  crude  methods  involving  high  losses  may  be  cheap  as  re- 
gards operating  costs,  there  is  always  likely  to  be  a  question 
whether  there  is  any  economy  in  low  costs  obtained  at  the  expense 
of  undue  waste,  or  whether,  on  the  other  hand,  high  efficiency 
of  methods  may  not  be  at  the  expense  of  excessive  cost.  I  think 
it  has  seldom  been  considered  that  there  are  such  substantial 
losses  in  each  department  of  the  business.  If  we  hear  a  discus- 
sion of  mill  losses  in  a  given  district  it  is  to  be  noticed  that  the 
question  of  mine  losses  is  apt  to  be  ignored;  if  attention  is  called 
to  mine  losses  there  is  apt  to  be  silence  on  the  subject  of  smelting 
losses.  It  seems  desirable,  therefore,  to  draw  attention  to  some 
of  the  salient  facts  in  regard  to  losses. 

There  never  was  a  mine  from  which  all  the  available  ore  was 
extracted.  The  ore  is  exposed  to  wastage  from  a  variety  of  causes. 
If  the  orebody  is  large,  soft,  and  homogeneous,  as  in  the  Lake 
Superior  iron  mines,  ore  is  lost  through  absolute  failure  to  mine 
it.  Some  is  forgotten  until  the  openings  to  it  are  caved  and  lost. 
Some  ore  is  constantly  being  mixed  with  sand  or  rock  and  left  be- 
cause its  grade  has  been  lowered.  Some  is  surrounded  by  the  cav- 
ing of  the  overburden  into  the  mine  openings  in  such  a  manner  as 
to  be  irrecoverable.  System,  care,  and  expense  will  do  much  to 
diminish  these  losses.  It  may  happen  that  beyond  a  certain  point 
the  cost  of  perfecting  the  extraction  may  increase  very  rapidly,  may 
indeed  necessitate  a  different  and  more  costly  method  of  mining. 

Since  mines  are  worked  for  the  profit  and  not  for  the  gross 
value  of  their  output  it  may  be  more  economical  to  choose  a 
cheap  method  in  which  the  waste  of  ore  may  be  great.  For 
instance,  suppose  an  ore  worth  $2  a  ton  can  be  mined  with  a  90 
per  cent,  extraction  for  $1.25  a  ton,  but  that  by  another  method 
at  a  75  per  cent,  extraction,  it  can  be  mined  for  90  cents  a  ton. 
One  hundred  tons  of  ore  in  the  ground  would  in  the  two  cases 
yield  the  following  results: 

ORE  WORTH  $2  PER  TON 

Tons         Cost  Value  Profit 

First  case 90     $112.50     $180.00     $67.50 

Second  case 75         67.50       150.00       82.50  =  $15  gain. 


FACTORS   GOVERNING  VARIATIONS  29 

ORE  WORTH  $5  PER  TON 

Tons          Cost     m        Value  Profit 

First  case 90     $112.50      $450.00  $337.50 

Second  case 75          67.50       375.00     307.50  =  $30  loss. 

It  is  evident,  therefore,  that  even  in  the  most  homogeneous 
materials  the  cost  of  mining  is  directly  affected  by  the  value  of 
the  product. 

SMYTH'S  FORMULA 

Prof.  H.  L.  Smyth  works  out  the  mathematical  expression 
for  the  proportion  of  the  deposit  that  may  be  abandoned  in  order 
to  secure  a  lower  mining  cost  per  ton  as  follows: 

Let  Q  equal  the  total  number  of  tons  of  ore  in  a  deposit  recov- 
erable by  the  most  perfect  method;  X,  the  number  of  tons  aban- 
doned by  any  other  method;  p,  the  profit  per  ton  by  method  Q; 
and  p',  the  profit  by  the  other  method.  When  (Q  —  X)  pf  equals 
Q  p,  the  two  methods  are  equally  desirable.  Therefore, 

P_  _Q-X 

P'~      Q 
and 

X        fl-p\      p'-p 

Q       \  P'  J~     P' 

Then  p'  —  p  equals  the  saving  per  ton  effected  by  the  second 
method.  The  proportion  of  the  deposit  that  may  be  sacrificed 
therefore  depends  on  the  ratio  of  the  saving  to  the  profit  per 
ton.  This  ratio  increases  as  the  profit  diminishes;  therefore  for 
a  given  saving  a  larger  proportion  of  ore  of  low  value  may  be 
sacrificed  than  of  high  value. 

OTHER  CAUSES  OF  Loss 

In  flat  deposits  in  hard  rock  it  is  nearly  always  necessary 
to  leave  some  ore  in  pillars.  Where  the  deposits  are  steeply 
inclined  some  ore  is  usually  left  in  pillars  unless  the  body  is  exceed- 
ingly small.  In  the  case  of  very  large  bodies  of  low-grade  ore, 
like  the  Alaska-Treadwell,  large  amounts  are  left  in  this  man- 
ner, not  only  to  insure  the  safety  of  the  mine  but  also  to  insure 
cheapness  of  working.  In  every  case  where  pillars  are  left  there 
is  a  likelihood  of  portions  being  ultimately  lost. 

Where  ores  are  sorted,  i.e.,  where  they  are  not  homogeneous, 


' 


30  THE  COST  OF   MINING 

some  good  material  is  always  rejected  through  ignorance  or 
carelessness.  Where  filling  is  introduced  into  a  stope  there  is 
invariably  a  certain  amount  of  good  ore  that  falls  in  with  it  and 
is  lost.  Where  low-grade  ores  are  sorted  out  and  stowed  under- 
ground because  they  cannot  be  shipped  and  treated  except  at 
a  loss,  there  is  a  great  loss  of  metallic  value,  but  since  it  cannot 
be  said  that  such  material  is  payable  it  cannot  under  present 
conditions  be  called  a  loss. 

These  mining  losses  are,  I  believe,  seldom  measured.  More 
or  less  accurate  guesses  are  made  by  the  engineers  on  the  ground, 
but  the  losses  in  mining  are  almost  never  seriously  reported.  In 
a  general  way  we  may  place  mining  losses  at  from  5  to  30  per 
cent,  of  the  developed  ore. 

LOSSES  IN  MILLING  AND  SMELTING 

Milling  losses  are  in  some  localities  painfully  and  accurately 
studied;  in  other  places  they  are  casually  guessed  at  or  ignored. 
It  is  usually  fashionable  to  guess  the  extraction  at  80  to  90  per 
cent,  for  concentrating  and  at  about  95  per  cent,  for  cyaniding  or 
chlorinating.  Sometimes,  as  a  matter  of  fact,  losses  in  concen- 
tration amount  to  40  per  cent,  or  even  more.  When  the  milling 
is  not  systematically  and  accurately  checked  the  losses  as  a  rule 
are  much  higher  than  the  owners  imagine.  Little  definite  infor- 
mation is  to  be  had. 

Smelting  losses  are  probably  determined  much  more  accu- 
rately than  either  mining  or  milling  losses,  but  they  are  almost 
never  mentioned  in  reports  to  stockholders.  In  this  department 
of  the  business  it  is  necessary  to  take  more  or  less  general  state- 
ments of  metallurgists. 

The  importance  and  economic  bearing  of  the  losses  sustained 
in  some  representative  districts  are  shown  in  an  accompanying 
table.  Much  care  must  be  exercised  in  the  interpretation  of 
these  figures  for  economic  purposes.  The  values  thrown  away 
are  theoretical  values.  The  practical  limit  of  extraction  invari- 
ably falls  short  of  100  per  cent.  The  real  purpose  of  the  table 
is  to  show  in  current  practice  the  debatable  ground  in  which 
the  curtailment  of  losses  is  confronted  by  a  rising  scale  of 
costs. 


FACTORS   GOVERNING  VARIATIONS 


31 


PROPORTIONATE    RECOVERY  AND  LOSSES  IN  100   TONS  OF  ORE  IN  SOME 
IMPORTANT  MINING  DISTRICTS 


J"" 

X 

•c 

Lake 

S.E. 

S.  W. 

2U 

Cripple 

£? 

Superior 

Missouri 

Missouri 

%& 

Creek 

| 

Iron 

Lead 

Zinc 

«  tf 

Gold 

s 
ffi 

3° 

Gross  value  in  the  ground  
Gross  value  recovered  by  mining  .... 

$110 

88 

$800 
$600  to    760 

$460 
400 

$500 
$375  to    475 

$280 
246 

$1000 
$850  to  $950 

Gross  value  recovered  by  milling  
Gross  value  recovered  by  smelting  .  .  . 

550  to    744 

$300  to  $340 
270  to    332 

187  to    300 
163  to    260 

186 
180 

782  to    912 
840  to    940 

Gross  aggregate  losses  

M?, 

$56  to  $250 

$128  to  $190 

$240  to  $337 

$100 

$60  to  $160 

80 

70  to  93 

58  to  72 

33  to  52 

64 

78  to  94 

The  aggregate  losses  represent  the  maximum  of  additional  operating  expense  theoretically  justi- 
fiable by  the  extinguishment  of  losses. 

It  has  been  shown  in  the  case  of  Cripple  Creek  ores  how  a 
mining  cost  may  be  too  low,  and  it  may  be  shown  in  the  same 
way  that  milling  and  smelting  costs  may  be  too  low.  As  a  mat- 
ter of  fact  they  are  very  apt  to  be  too  low;  rather  more  often  too 
low  than  too  high.  Nevertheless  it  is  perhaps  well  to  point  out 
that  the  economical  cost  is  always  a  function  of  the  value  of  the 
product.  Of  the  various  products  of  mines  gold  is  the  only  one 
whose  value  is  fixed.  Where  the  product  is  variable  in  price 
the  proportion  of  the  losses  is  constantly  changing,  and  the 
amount  of  expense  warranted  by  the  pursuit  of  such  losses  also 
varies.  Since  the  operation  of  a  mine,  mill,  or  smelter  is  usually 
a  thing  that  does  not  lend  itself  to  a  ready  adjustment,  we  find 
that  refinements  of  methods  designed  to  limit  losses  are  fixed  to 
those  that  will  be  economical  at  rather  low  prices.  For  instance, 
we  find  copper  plants  are  planned  to  make  savings  that  will  be 
economical  at  13-cent  copper  instead  of  at  25-cent  copper;  lead 
plants  are  planned  for  4-cent  lead  and  not  for  6-cent  lead,  etc. 

WASTE  IN  EXPLOITATION 

At  this  point  it  may  be  pertinent  to  remark  that  questions 
of  mere  economy  and  profit  may  come  into  conflict  with  public 
policy.  Much  has  been  said  about  the  necessity  of  conserving 
the  forests*  of  the  United  States.  A  forest  when  denuded  is  not 
beyond  the  possibility  of  ultimate  replacement;  an  orebody  or  a 
coal  seam,  on  the  other  hand,  once  destroyed  is  gone  forever.  It 


32  THE  COST  OF  MINING 

is  very  likely  out  of  the  sphere  of  the  Government  to  interfere  in 
the  disposition  of  properties  that  have  passed  to  private  ownership, 
but  it  is  quite  feasible  for  the  Government  to  take  measures  to 
prevent  undue  waste  in  the  exploitation  of  the  lands  that  it  still 
retains;  and  it  seems  fully  worth  while  for  large  private  proprietors 
to  consider  the  future  as  well  as  the  present  and  to  take  measures 
to  prevent  some  of  the  shameful  wastes  that  are  going  on. 

For  instance,  no  one  will  deny  that  ultimately  the  world  will 
need  every  ton  of  coal  that  can  be  had.  Future  generations  will 
be  very  glad  to  mine  coal  from  2-ft.  seams,  many  of  which  are 
now  utterly  destroyed  by  the  working  out  of  thicker  seams  not 
far  below  them.  Similarly,  it  would  seem  worth  while  for  land 
owners  to  bring  pressure  to  bear  in  the  working  of  metal  deposits 
like  those  of  southwestern  Missouri  where  there  is  a  waste  of  at 
least  50  per  cent,  of  the  zinc,  and  at  Lake  Superior  where  there 
is  an  enormous  waste  of  low-grade  iron  ores  which  have  been 
caved  in  and  left  behind  during  the  extraction  of  richer  portions. 
Wherever  the  introduction  of  these  economies  in  material  can 
be  effected  without  financial  loss,  their  introduction  can  do  the 
operators  no  harm  and  will  certainly  be  a  benefit  to  the  land 
owners  and  to  the  public  at  large. 

STATEMENT  OF  MINING  COSTS 

A  true  statement  of  mining  costs,  therefore,  should  with  due 
consideration  of  the  above  factors  fall  under  the  following  head- 
ings: 

(1)   General  expense  of  the  company 1 

Exploration  and  development 2 

Stoping  cost 3 

Stoping  and  sorting  losses 4 

[  Amortization  of  mining  plant  ....  5 

Transportation  to  mill 6 

Operating  costs 7 

Losses 8 

Amortization  of  milling  plant  ....  9 

Transportation  to  smelter 10 

Operating  costs 11 


(2)   Mining. 


(3)   Milling. 


(4)   Smelting,  re- 
fining   and 

°  ' '  I  Amortization  of  smelting  plant. . .      13 


,  , 
fining    and    T 

Losses 12 


Unfortunately  it  is  impossible  to  treat  the  subject  so  com- 
prehensively owing  to  the  absence  of  adequate  reports.     Most 


FACTORS   GOVERNING   VARIATIONS  33 

companies  are  ignorant  of  both  their  costs  and  their  losses;  some 
know  their  costs  but  do  not  know  their  losses;  very  few  know 
both.  Some  of  the  most  scientifically  managed  concerns,  like 
the  American  Smelters  Securities  Company,  issue  very  few  reports, 
although  the  management  of  this  company  does  publish  one 
report,  that  of  the  Esperanza  Limited,  which  tells  the  whole 
story,  but  even  in  that  model  statement  there  is  no  specific  refer- 
ence to  the  amortization  costs  nor  to  mining  and  smelting  losses. 

Where  a  company  does  not  own  a  mill  or  smelter  it  cannot, 
of  course,  state  details  for  any  amortization  charges  or  operating 
costs  or  losses  for  those  departments.  Nevertheless,  these  things 
cannot  be  ignored  either  scientifically  or  commercially.  Charges 
for  them  are  fixed  by  contract.  When  a  mine  sells  its  ore  to  a 
smelter  it  pays  commercially  for  amortization  and  operation  of 
the  smelter  under  treatment  charges  and  for  the  losses  by  arbi- 
trary deductions. 

In  the  absence  of  such  reports  as  will  give  the  essentials  the 
most  feasible  plan  of  treating  the  subject  seems  to  be  to  divide 
the  costs  into  tl>ree  main  headings:  (1)  Mining,  including  devel- 
opment; (2)  milling,  including  transportation  from  mine;  (3) 
smelting,  refining,  and  marketing,  including  transportation  from 
mill  and  to  markets. 

Generally  the  reports,  or  reliable  information,  are  sufficient 
to  give  a  fairly  close  approximation  to  the  costs.  It  is  seldom 
indeed  that  any  statement  can  be  found  showing  the  charge  to 
be  made  under  each  of  these  headings  for  amortization  of  plants, 
but  there  is  usually  some  means  of  getting  an  idea  of  it.  This 
can  be  done  many  times  by  simply  ignoring  credits  to  capital 
on  construction  accounts  over  a  considerable  period  of  years. 
This  can  be  done  on  the  logical  principle  that  since  the  construc- 
tion is  all  for  the  benefit  of  the  operation  of  the  mine  it  should 
all  be  absorbed  in  operating  accounts.  It  will  hardly  be  advis- 
able to  give  in  all  cases  the  sources  of  information  on  which  the 
cost  estimates  are  based ;  but  it  is  possibly  worth  while  to  assert 
that  the  figures  are  not  far  from  the  truth  in  spite  of  certain 
differences  from  published  statements. 

MANAGEMENT 

In  discussing  the  factors  that  determine  the  cost  of  mining  I 
have  touched  thus  far  only  upon  the  tangible  and  definite  ones 


34  THE  COST  OF  MINING 

of  whose  importance  we  can  get  a  more  or  less  logical  measure; 
but  the  discussion  would  not  be  complete  without  some  mention 
of  the  intangible  and  unmeasured  but  important  factor  of  man- 
agement. I  wish  to  apply  the  term  in  its  broadest  sense  and 
include  in  it  the  financing  of  an  enterprise,  the  determination  of 
its  scope,  the  selection  of  its  methods,  and  its  administration. 

To  begin  with,  it  is  noticeable  that  enterprises  in  a  given  -dis- 
trict have  much  in  common  and  are  apt  to  differ  in  methods 
from  the  enterprises  of  other  districts.  For  instance,  in  Cripple 
Creek  it  is  rare  for  a  mining  company  to  treat  its  own  ores,  while 
in  Butte  most  companies  have  done  so;  in  the  Lake  Superior 
copper  mines  the  underground  work  is  done  largely  by  contract 
with  the  miners,  while  in  Arizona  this  is  exceedingly  rare,  and 
so  on.  Each  district  has  its  own  peculiar  methods. 

There  is  a  probability  that  the  methods  of  a  given  district 
are  pretty  nearly  correct  because  they  are  inevitably  the  result 
of  experiment,  or  evolution,  and  the  fit  have  survived.  It  is 
logical  to  expect  this.  When  a  man  comes  into  a  district  that 
is  new  to  him  and  says  that  the  industrial  methods  in  use  there 
are  wrong,  he  does  nothing  less  than  declare  that  the  thousands  of 
people  who  have  developed  those  methods  are  either  ignorant  or 
stupid  or  lacking  in  enterprise.  Once  in  a  thousand  times  he  may 
be  right;  in  999  cases  he  doesn't  know  what  he  is  talking  about. 

To  illustrate  how  profoundly  true  this  principle  is  even  in 
the  face  of  reasons  to  the  contrary,  I  may  be  pardoned  for  relat- 
ing an  experience  of  my  own:  While  traveling  on  the  slopes  of 
the  Andes  in  Ecuador  ten  years  ago  I  noticed  that  my  traveling 
companion,  a  Spanish-American,  did  not  wash  or  bathe,  but 
carried  in  his  vest  pocket  a  small  bottle  of  camphor  with  which 
he  occasionally  rubbed  his  nose.  Whenever  we  came  to  a  stream 
I  would  very  likely  take  a  bath.  To  this  Rodriguez  objected 
vigorously,  saying,  "If  you  want  to  live  in  this  country,  without 
getting  the  fever  you  must  observe  two  rules,  namely,  sleep  in 
a  closed  room,  and  don't  bathe  out  of  doors."  I  told  him,  and 
thought,  that  the  true  laws  of  health  demanded  fresh  air  and 
cleanliness,  and  probably  every  Anglo-Saxon  would  have  said 
the  same  thing.  But,  on  returning  to  this  country  a  few  months 
later,  I  heard  of  the  mosquito  theory  of  malaria  and  saw  a  new 
light.  Rodriguez  was  right.  Observation  had  taught  the  na- 
tives empirically  two  ways  of  keeping  off  mosquitoes  and  fairly 


FACTORS   GOVERNING  VARIATIONS  35 

effective  ways.  They  could  not  give  the  reasons  but  they  got 
results.  It  is  quite  true  that  a  mosquito  net  is  just  as  good  as  a 
coat  of  dirt  to  ward  off  the  fever-bearing  insect,  and  that  by 
means  of  it  one  may  also  enjoy  the  luxury  of  fresh  air;  but  the 
point  is  the  mosquito  must  be  kept  out.  The  person  who  does  not 
realize  this  is  running  a  risk  of  death  from  sheer  ignorance.  The 
same  thing  may  be  said  of  superficial  criticism  of  customs  in  gen- 
eral and  of  mining  customs  in  particular.  There  is  very  apt  to 
be  a  "joker"  in  the  game  for  the  rash  innovator  and  he  may  find 
himself  and  his  new  methods  up  against  a  hand  of  five  aces. 

I  feel,  therefore,  that,  as  a  general  rule,  it  is  unfair  and  stupid 
to  measure  the  methods  of  one  district  by  the  standards  of  an- 
other, but  this  does  not  mean  that  the  methods  in  use  are  always 
the  best.  Among  operators  in  the  same  district,  where  all  are 
equally  conversant  with  the  governing  factors  of  the  situation, 
we  will  invariably  find  some  who  get  better  results  than  others. 
We  will  find,  running  side  by  side,  mines  that  show  great  and 
apparently  inexplicable  differences  in  cost.  We  will  find  in  any 
district  examples  of  mines  that  have  failed  under  one  manage- 
ment and  succeeded  under  another.  While  the  effect  of  man- 
agement is  well  understood  by  every  one,  it  does  not  lend  itself 
to  expression  in  figures;  nevertheless  there  are  some  things  that 
may  be  said  of  it  of  a  nature  pertinent  to  this  discussion. 

One  thing  has  been  noted  as  a  rule;  viz.,  rich  mines  cost  more 
to  run  than  low-grade  mines.  It  is  generally  conceded  that  this 
is  to  be  explained  by  the  liberality  of  the  carefree.  There  is 
something  more  than.  this.  Suppose  two  deposits  are  found  20 
miles  apart,  one  of  ore  worth  $5  a  ton,  and  the  second  worth  $2 
a  ton.  The  first  is  opened  up  by  the  first  method  that  occurs  to 
the  owners,  the  ore  is  shipped  and  it  is  discovered  that  it  costs 
$3  a  ton  to  mine  it.  The  owners  congratulate  themselves  on 
their  40  per  cent,  profits.  Their  business  is  established;  they 
are  making  lots  of  money;  to  make  changes  and  improvements  is 
laborious,  expensive,  may  involve  delay  in  marketing  the  pro- 
duct and  may  not  turn  out  well  after  all.  Why  not  leave  well 
enough  alone? 

The  second  body  of  only  $2  ore,  after  being  opened  up,  is 
left  alone  for  a  while.  It  is  considered  too  low-grade  to  pay. 
But  some  enterprising  person  at  last  comes  along  who  thinks  it 
may  be  worked.  He  chooses  for  a  superintendent,  not  the  first 


36  THE  COST  OF  MINING 

man  he  meets,  last  of  all  some  friend  or  relative  but  some  one 
he  thinks  able  to  get  results.  All  possible  methods  are  studied 
in  order  to  choose  the  cheapest.  All  possible  precautions  are 
used  to  avoid  unnecessary  expenditures  on  plant.  Every  em- 
ployee is  impressed  with  the  necessity  of  efficiency.  After  the 
enterprise  is  finally  going  it  proves  that  the  ore  is  being  mined 
at  $1.20  per  ton  and  the  triumphant  owner  of  the  $2  ore  also 
secures  40  per  cent,  profit  on  his  product. 

LOGICAL  REASON  FOR  RICH  MINES  COSTING  MORE 

There  may  be  no  physical  reason  for  this  difference  in  cost; 
there  may  be  no  intentional  liberality  on  the  part  of  the  owners 
of  the  richer  property.  Nevertheless,  there  is  a  logical  ground 
for  a  difference  in  the  selection  imposed  by  necessity.  In  the 
rich  mine  there  is  no  necessary  selection;  ergo  there  is  no  selec- 
tion. We  may,  therefore,  count  on  a  certain  increment,  some- 
times very  large,  sometimes  very  small,  of  additional  expense  in 
mining  rich  ores  as  compared  with  poorer  ores. 

Necessity  may  work  vast  economies  in  the  same  mines.  The 
Champion  iron  mine  at  Beacon,  Mich.,  was  producing  ore  in 
1892  at  $2.50  a  ton.  It  had  then  been  running  25  years  and  was 
reputed  to  be  a  very  well  managed  mine.  In  1899,  the  mine 
was  deeper,  the  orebodies  smaller,  wages  the  same,  the  plant  the 
same,  the  management  the  same,  but  the  ore  only  cost  $1.25 
per  ton.  Necessity  had  worked  this  change  through  the  panic 
of  1893.  Similar  changes  were  wrought  in  other  mines. 

HOOVER'S  THEOREM 

The  economic  ratio  of  treatment  capacity  of  ore  reserves  is 
a  question  that  has  been  brought  up  by  H.  C.  Hoover  and  vig- 
orously discussed  by  many  prominent  engineers.  Ross  E. 
Browne  ("  Working  Costs  on  the  Witwatersrand ")  has  recently 
brought  additional  evidence  to  bear  out  the  correctness  of  Mr. 
Hoover's  conclusions  that  economically  mines  should  be  worked 
out  with  great  rapidity  and  that  additional  plant  should  be  pro- 
vided for  the  extraction  of  discovered  ores  within  periods  of 
from  three  to  six  years.  There  seems  to  be  no  doubt  of  the  math- 
ematical correctness  of  this  conclusion,  but  it  seems  to  apply 
logically  only  to  gold  mines  where  there  is  no  practical  limit  to 
the  sale  of  the  output.  In  the  mining  of  products  other  than 


FACTORS   GOVERNING  VARIATIONS  37 

gold  it  seems  that  a  limitation  is  put  upon  the  output  by  the 
market.  In  the  case  of  Lake  Superior  iron  ores,  for  example, 
there  are  fifteen  hundred  million  tons  in  sight.  To  work  these 
all  out  and  convert  them  into  pig  iron  in  six  years  is  not  only  a 
physical  impossibility,  but  would  be  economically  absurd.  It 
is  not  at  all  absurd,  however,  for  an  isolated  operator  among 
many  to  apply  this  principle  to  his  own  profit.  It  may  be  that 
the  application  of  this  very  principle  has  resulted  in  the  forma- 
tion of  gigantic  trusts.  It  seems  probable  that  the  growth  of  the 
Carnegie  Steel  Company  in  competition  with  its  neighbors  may 
have  been  largely  due  to  the  application  of  this  idea  to  steel 
manufacturing;  but  in  course  of  being  fully  worked  out,  the  result 
was  the  formation  of  the  United  States  Steel  Corporation  which 
now  controls  75  per  cent,  of  the  iron  ores  of  Lake  Superior  and 
from  mere  extent  of  growth  has  landed  in  a  position  where  the 
application  of  Mr.  Hoover's  principle  is  no  longer  possible. 

ECONOMY  AND  SPEED 

It  is  to  be  remarked  in  this  connection  that  a  wide-awake 
manager  may  see  his  way  clear  to  overlook  questions  both  of  a 
high  percentage  of  extraction  and  of  cheap  work  to  reap  the  ben- 
efits incident  to  speed.  Take,  for  example,  a  body  of  soft  iron 
ore  of  limited  cross-section  pitching  rather  steeply  into  the  earth. 
The  requirements  of  thorough  extraction  and  cheap  working 
would  very  likely  be  satisfied  by  the  use  of  the  slicing  system  of 
mining,  but  in  such  a  case  the  volume  of  product  would  be  lim- 
ited because  the  area  on  which  slicing  can  be  conducted  is  prac- 
tically limited  to  a  single  horizontal  section  of  the  orebody.  This 
limitation  of  the  product  during  years  of  high  prices  might  be  a 
very  serious  handicap  and  it  would  probably  be  wise  to  adopt  a 
different  system,  perhaps  less  effective  and  more  costly,  but 
which  would  allow  the  working  of  a  number  of  levels  at  once 
and  the  turning  out  of  a  large  output  at  an  advantageous  time. 

The  management  of  large  properties  may  come  into  conflict 
with  public  economy  in  the  following  way:  Large  sums  of  money 
are  locked  up  in  the  purchase  of  great  tracts  of  mineral  lands, 
far  in  excess  of  the  requirements  of  the  immediate  future.  The 
sums  thus  invested  are  usually  raised  by  bond  issues  and  the  inter- 
est on  these,  together  with  taxes,  amount  annually  to  large^sums 
which  the  public  must  pay.  These  charges  are  inevitable,  and 


38  THE  COST  OF  MINING 

are  quite  independent  of  any  desire  on  the  part  of  such  holders 
to  raise  prices  through  the  opportunities  afforded  by  the  exist- 
ence of  partial  monopolies.  Conspicuous  examples  of  this 
state  of  affairs  are  afforded  by  the  United  States  Steel  Corpora- 
tion, especially  since  it  has  absorbed  the  Tennessee  Coal,  Iron, 
and  Railroad  Company,  and  by  the  Philadelphia  &  Reading  Coal 
and  Iron1  Company.  Both  of  these  great  corporations  have 
mineral  lands  sufficient  to  guarantee  their  product  far  into  the 
future,  but  they  represent  investments  on  which  charges  of  many 
million  dollars  a  year  must  be  paid,  and  paid  by  the  public. 


CHAPTER  III 
PARTIAL  AND   COMPLETE   COSTS 

Terminology  and  method  of  analysis  —  Partial  and  complete  costs  — 
Operating,  maintenance,  depreciation,  and  amortization  —  Dividend 
costs  and  selling  costs  —  Examples  of  depreciation  —  Analysis  of  cost 
statements  —  Amortization  tables  —  Table  of  plant  cost  per  annual 
ton  and  life  of  mines  —  Investors'  precautions. 

I  KNOW  from  experience  that  many  operating  men,  though 
deep  in  details,  are  only  acquainted  with  partial  costs.  Their 
point  of  view  does  not  reach  the  tout  ensemble.  For  instance,  a 
man  may  be  in  charge  of  a  mine  and  called  manager  or  superin- 
tendent. His  business  ends  when  the  ore  is  delivered  into  cars 
to  be  shipped  to  the  mill.  Up  to  that  point  he  thinks  he  is  famil- 
iar with  the  costs.  Probably  he  is  not,  though  he  may  be.  It 
is  more  likely  that  he  knows  little  or  nothing  about  the  capital 
invested  in  the  mine  and  the  average  annual  value  of  it.  He 
is  probably  full  of  information  about  the  current  operating  costs 
of  his  one  department  —  the  mine.  He  does  not  know  what 
is  involved  in  transportation  to  the  mill,  in  milling,  in  smelting, 
in  general  expense.  His  knowledge  of  the  business  as  a  whole 
is  very  limited.  In  talking  with  other  mining  men  he  may  be 
elated  or  depressed  at  learning  that  his  costs  are  lower  or  higher 
than  theirs,  but  he  may  find  out  later  that  he  has  reasoned  from 
false  premises.  He  is  really  talking  about  a  segment  of  the  busi- 
ness to  men  who  are  also  talking  about  segments  of  the  business, 
and  the  segments  may  be,  and  are  very  likely  to  be,  different  in 
each  case. 

Now  such  a  man  is  very  apt  to  graduate  into  a  mining  engi- 
neer and  to  examine  mines  and  report  on  them  without  once 
giving  consideration  to  the  limitations  he  is  under.  He  repairs 
by  experience  some  of  his  misapprehensions,  but  his  conception 
of  the  business  is  very  likely  to  remain  only  a  partial  conception; 

39 


40  THE  COST  OF  MINING 

at  the  best  he  is  clear  about  only  a  part  and  hazy  about  the 
rest. 

The  costs  reported  to  stockholders  and  investors  are  very 
apt  to  be  only  partial  costs.  They  are  almost  never  so  expressed 
as  to  give  one  a  true  understanding  of  the  business.  This  may 
not  be  intentional;  merely  a  narrow  view  of  the  financial  real- 
ities. In  the  following  chapters  I  shall  review  the  statements 
of  many  mining  companies  and  it  will  be  seen  that  I  have  recon- 
structed nearly  all  of  them,  putting  my  own  interpretation  upon 
their  figures  and  in  many  cases  rejecting  their  figures  as  inade- 
quate and  substituting  others.  I  would  not  be  rash  enough  to 
do  such  things  without  reason.  It  is  in  every  case  merely  draw- 
ing an  irresistible  conclusion,  such  conclusions  as  no  two  men 
would  argue  about  so  long  as  they  had  the  same  point  of  view. 
I  propose  here  to  describe  my  method  and  point  of  view  in  cost 
analysis;  but  first  I  shall  define  certain  expressions  that  are  in 
common  use  in  this  discussion. 

There  is  a  certain  confusion  in  the  use  of  the  terms,  operating, 
maintenance,  depreciation,  and  amortization.  In  this  book  I 
intend  to  have  a  perfectly  clear  meaning  for  three  of  these  terms. 
Maintenance  is  a  term  to  which  I  attach  little  importance.  It 
is  simply  the  cost  of  keeping  things  in  good  order  and  is  an  unde- 
niable operating  item.  I  shall  assume  under  all  circumstances 
that  maintenance  is  included  under  the  head  of  operating. 

Operating,  or  current  operating,  charges  are  those  that  relate 
to  the  obtaining  of  product.  It  includes  all  the  labor,  salaries, 
and  supplies  used  on  the  actual  yield  of  a  mine  for  a  limited 
period,  but  excludes  all  charges  that  may  be  a  preparation  for 
a  yield  to  be  obtained  later.  Note  that  I  say  "for  a  limited 
period";  for  I  make  it  a  cardinal  and  self-evident  axiom  that 
whenever  we  extend  our  point  of  view  to  the  whole  life  of  a  mine 
or  property,  we  immediately  abolish  the  difference  between 
operating  and  capital  costs.  Then  all  expenses  are  operating 
expenses. 

The  capital  charges  of  depreciation  and  amortization  are  only 
suspense  accounts  intended  to  exhibit  the  difference  between 
operating  for  a  short  period  and  operating  for  the  whole  period. 
Now  unless  we  are  holding  a  post-mortem  examination  on  a  dead 
mine  we  never  know  just  what  the  difference  is.  These  items 
then  are  estimates,  and  I  feel  it  necessary,  in  order  that  one  may 


PARTIAL  AND  COMPLETE  COSTS 


41 


understand  my  cost  analyses,  to  explain  carefully  how  I  make 
these  estimates. 

Frequent  reference  will  be  found  in  coming  chapters  to  divi- 
dend costs  and  to  selling  costs.  By  selling  cost  I  mean  the  real 
or  complete  cost,  the  cost  at  which  the  product  must  be  sold  to 
justify  the  enterprise.  It  includes  the  whole  cost,  including  all 
capital  employed,  with  interest  for  the  whole  period  of  operating. 
Obviously,  if  these  total  expenditures  amount  to  say  $10,000,000 
and  the  total  return  is  only  $9,500,000,  the  enterprise  is  not  a  suc- 
cessful one.  But  suppose  that  of  the  ten  millions  spent,  the 
sum  of  three  millions  is  represented  by  two  millions  spent  on 
initial  plant  and  one  million  for  interest  on  that  sum  at  5  per 
cent,  for  10  years  during  which  there  were  no  dividends.  These 
three  million  dollars  are  not  operating  charges,  at  least  they  are 
not  the  current  daily  operating  charges  that  the  mine  manager 
knows  about.  His  operating  charges  are  only  $7,000,000,  while 
the  proceeds  are  $9,500,000.  Here  we  have  $2,500,000  to  be 
paid  in  dividends.  Here  our  selling  cost  is  $10,000,000.  Our 
enterprise  is  really  and  truly  a  failure  unless  our  returns  equal 
that  amount.  But  our  dividend  cost  is  only  $7,000,000.  This 
sort  of  a  difference  is  practically  universal  in  mining  cost  state- 
ments. I  never  knew  of  one  in  which  the  real  selling  cost  was 
calculated. 

As  a  general  rule  the  cost  of  production  is  understated 
much  more  than  it  would  be  in  this  case  if  it  were  given  at  7 
instead  of  10.  Why  is  this?  Because  7,  the  dividend  cost,  is  in 
itself  a  composite  figure.  It  consists  of  two  elements:  (a)  those 
costs  that  plainly  belong  to  merely  getting  out  the  product,  and 
(b)  some  other  costs  that  seem  to  be  creating  something  perma- 
nent, but  really  are  not.  These  things  are  apt  to  be  euphemized 
into  " capital  charges."  In  our  hypothetical  case  our  7,  being 
the  dividend  cost,  is  very  apt  to  be  made  up  of  the  figures  5  and 
2;  the  first  being  " working  charges"  and  the  second  being 
"construction."  This  construction  seems  to  be  permanent;  it  is 
"  doing  great  things  for  the  property,"  "  working  wonders."  In 
fact  it  is  absolutely  essential;  but  it  must  be  paid  for  before 
dividends  appear,  and  therefore  is  included  in  the  dividend 
cost:  but  our  euphemistic  report  gives  the  working  cost,  the  cost 
of  production,  at  5. 

Remembering  that  we  found  at  the  very  beginning  that  the 


42  THE  COST  OF  MINING 

real  cost  was  10,  we  must  explain  that  the  difference  is  made  up 
of  amortization  and  depreciation.  Amortization  accounts  for 
the  difference  between  10  and  7,  depreciation  accounts  for  the 
further  difference  between  7  and  5.  The  omission  of  these  sums 
may  not,  possibly,  be  of  any  injury  to  any  one;  but  it  certainly 
results  in  an  outrageous  underestimate  of  costs. 

By  depreciation,  then,  I  mean  current  construction  costs; 
improvements.  Until  a  mine  is  dead  and  ready  to  be  buried  in 
a  watery  grave  there  are  always  expenses  of  this  kind.  Depre- 
ciation means  literally  the  process  of  losing  value:  practically  it 
means  the  exact  opposite;  it  means  expenses  undertaken  to 
counteract  loss  of  value.  I  hear  it  asked,  why  is  this  not  main- 
tenance? It  is  maintenance.  It  only  seems  not  to  be  main- 
tenance because  the  items  that  compose  these  charges  have  the 
appearance  of  being  new  plant,  not  merely  replacements  of  old 
plant.  I  shall  give  some  examples. 

Let  us  suppose  a  mine  to  be  started  on  a  very  large  tract  of 
land  (to  avoid  all  complications  except  natural  ones,  let  us  get 
rid  of  our  neighbors),  with  a  vein  running  north  and  south  and 
dipping  vertically.  Two  shafts  are  started,  a  mill  erected  and 
the  property  put  in  operation.  At  the  depth  of  500  ft.  the  south 
shaft  runs  out  of  the  ore.  The  manager  is  alarmed,  the  direc- 
tors thunderstruck.  But  the  north  shaft  is  in  good  ore  at  700 
ft.  Ah!  we  have  an  ore  shoot  pitching  north!  Every  level 
goes  farther  in  that  direction  than  the  one  above  it.  A  new 
shaft  must  be  sunk,  No.  3,  further  north.  It  must  be  sunk 
1500  ft.  at  a  cost  of  $150,000  before  it  produces  anything. 
The  south  shaft  barely  lasts  till  No.  3  goes  into  commission. 
You  may  be  sure  that  this  situation  is  fully  explained  to  the 
stockholders.  No.  3  shaft  is  "  capital  expenditure,"  etc.,  etc. 
"It  will  not  be  necessary  to  undertake  anything  of  the  kind 
again ! " 

This  statement  is  utterly  misleading.  The  construction  and 
equipment  of  No.  3  shaft  is  pure  depreciation  —  an  expenditure 
that  should  be  written  off  to  operating  as  fast  as  it  is  made.  No. 
3  does  nothing  but  take  the  place  of  the  south  shaft. 

Again,  our  original  north  shaft  has  reached  the  bottom  of 
the  ore.  "  We  have  again  been  disappointed.  It  was  unfor- 
tunate that  we  equipped  No.  3  as  we  did,"  I  might  quote  from 
an  imaginary,  but  very  frequent,  report,  "because  certain  unfore- 


PARTIAL  AND  COMPLETE  COSTS  43 

seen  conditions  have  arisen  that  make  it  evident  that  a  different 
plant  would  have  served  our  purpose  better.  It  is  found  now 
that  the  ore  shoot  has  a  pitch  averaging  45°  to  the  north  along 
the  plane  of  the  vein.  Evidently  a  shaft  inclined  to  the  north- 
ward at  that  angle  would  follow  the  ore.  A  single  shaft  like 
that  would  accomplish  our  purpose  as  well  as  a  number  of  ver- 
tical ones,  or  a  series  of  long  drifts  from  a  single  vertical  one. 
Moreover,  we  find  that  at  the  1500-ft.  level  of  No.  3  shaft  the 
vein,  instead  of  standing  vertical  as  it  has  above,  is  now  dipping 
to  the  west  at  an  angle  of  only  45°.  After  mature  considera- 
tion it  has  been  decided  that  our  best  course  will  be  to  put 
a  curve  in  No.  3  shaft  and  change  it  into  an  incline  below  the 
1500-ft.  level,  following  the  oreshoot  in  a  northwesterly  direc- 
tion. This  will  necessitate  changing  our  equipment.  Our  flat 
rope  hoist,  designed  for  handling  cages  in  a  vertical  shaft, 
must  be  replaced  by  a  round  rope  engine  with  a  drum.  We 
must  install  skips,  for  which  our  engineers  assure  us  it  will  be 
best  to  cut  underground  loading  pockets."  It  is  useless  to 
proceed  further,  except  to  explain  that  here  is  another  great 
capital  expenditure  "that  will  never  occur  again."  It  is  pure 
depreciation.  It  isn't  even  new.  It  is  the  same  problem  that 
caused  the  sinking  of  No.  3  shaft.  The  solution,  however, 
appears  new. 

I  could  cite  " capital  charges,"  "construction"  or  whatever 
it  is  called,  in  hundreds  of  cases  like  the  above.  The  same  thing 
appears  in  all  kinds  of  disguises.  There  are  always  expendi- 
tures going  on  that  appear  to  be  for  permanent  improvements, 
really  are  for  permanent  improvements,  but  which  are  really 
nothing  but  expenses  required  to  keep  the  property  from  depre- 
ciating; in  other  words,  to  enable  it  to  be  a  good  plant  and  not 
get  antiquated,  or  no  longer  adequate  to  changed  requirements. 
Money  is  even  spent  uselessly,  often  merely  for  fashion;  for 
fashion  is  so  far  from  being  confined  to  women's  finery  that  it 
reaches  the  methods  and  appliances  in  the  gruesome  depths  of 
mines. 

I  would  not  be  misunderstood  about  these  charges.  Some- 
times construction  that  amounts  to  nothing  but  depreciation  is 
combined  with  construction  that  does  make  a  real  addition  to 
capacity  and  earning  power  and  is  truly  capital.  Obviously  it 
is  impossible  for  me  to  familiarize  myself  thoroughly  with  all 


44  THE  COST  OF  MINING 

such  circumstances.  I  am  not  trying  to  go  into  niceties.  My 
purpose  only  is  to  exhibit  the  mining  industry  in  its  broad  and 
fundamental  outlines,  unobscured  by  detail.  It  is  necessary, 
therefore,  to  explain  that  in  the  analyses  of  costs  in  the  following 
chapters  I  have  not  followed  any  exact  rule.  My  analysis  is 
founded  on  the  circumstances  exhibited  by  the  reports.  These, 
however,  fall  into  two  general  groups:  rich  mines  that  have 
built  up  their  plants  entirely  out  of  profits  or  in  which  at  least 
there  has  been  a  continuous  growth  so  that  the  original  capital 
is  only  an  insignificant  fraction  of  the  total  investment;  and  low- 
grade  mines  not  rich  enough  to  start  themselves  and  not  profit- 
able enough  to  make  the  original  investment  soon  disappear. 
In  the  first  case  I  make  no  attempt  at  calculating  amortization, 
but  adopt  the  much  simpler  method  of  writing  off  all  expendi- 
tures, over  as  long  a  period  as  I  can  get  figures  for,  to  the  cost 
of  the  production.  In  the  second  case  I  charge  all  expenditures 
of  every  kind  to  capital  up  to  the  time  when  the  mine  is  producing. 
After  it  is  producing  I  charge  to  capital  those  •expenditures  made 
to  increase  the  capacity  until  the  mine  has  reached  what  appears 
to  be  an  average  production.  Then  this  total  is  written  off, 
with  interest,  over  a  period  that  seems  reasonable,  by  charging 
up  each  year  a  sum  calculated  to  retire  the  investment  within 
the  required  time. 

This  charge  is  the  amortization  of  capital. 

Ordinarily  I  put  the  period  of  initial  capital  expenditure  as 
far  back  as  possible  and,  unless  the  increase  of  capacity  is  very 
considerable,  I  charge  off  the  yearly  new  construction  to  oper- 
ating and  call  it  depreciation.  It  seems  hardly  necessary  to  go 
more  into  detail  because  in  most  cases  those  who  are  interested 
will  see  from  the  cost  analyses  themselves  the  method  adopted. 

A  word  further  about  amortization.  When  the  sum  to  be 
written  off  is  determined  it  is  necessary  to  fix  two  further  ele- 
ments: the  rate  of  interest  to  be  charged  and  the  period  in  which 
the  principal  must  be  extinguished.  The  first  I  have  taken  in 
all  cases  at  5  per  cent.  The  second  is  the  great  field  where  judg- 
ment and  experience  come  into  play;  wherein  the  mining  busi- 
ness exhibits  its  peculiarities  and  where  it  is  different  from  any 
other  form  of  commercial  enterprise.  We  must  discuss  it  fully, 
but  first  let  us  show  the  methods  by  which  amortization  may  be 
calculated.  One  way  is  shown  by  the  following  table  in  which 


PARTIAL   AND  COMPLETE  COSTS 


45 


a  sum  of  money  is  returned  to  the  investor  in  equal  instal- 
ments, which  are  supposed  to  be  part  interest  and  part  prin- 
cipal. The  part  that  represents  the  return  of  principal  for 
each  year  is  deducted  from  the  original  sum,  and  for  the  next 
year  interest  is  calculated  only  on  the  diminished  principal; 
but,  since  the  yearly  instalments  are  equal,  as  the  yearly  inter- 
est requirements  diminish  the  part  applying  to  the  return  of 
principal  will  increase  so  that  the  extinction  of  capital  becomes 
progressively  more  and  more  rapid. 

AMORTIZATION  TABLE.  —  5  PER  CENT. 

Showing  number  of  years  in  which  $1,000  is  cancelled  at  5  per  cent,  annual 
interest  and  5  per  cent,  amortization,  or  $100  annual  instalment. 


Years 

Amortized 

Interest 

Balance  Due 

1 

50.00 

50.00 

950.00 

2 

52.50 

47.50 

897.50 

3 

55.12 

44.88 

842.38 

4 

57.88 

42.12 

784.50 

5 

60.77 

39.23 

723.73 

6 

63.81 

36.19 

659.92 

7 

67.00 

33.00 

592.92 

8 

70.35 

29.65 

522.57 

9 

73.87 

26.13 

448.70 

10 

77.56 

22.44 

371.14 

11 

81.44 

18.56 

289.70 

12 

85.51 

14.49 

204.19 

13 

89.79 

10.21 

114.40 

14 

94.28 

5.72 

20.12 

15 

98.99 

1.01 

0.00 

Another  method  of  extinguishing  capital  by  annual  instal- 
ments is  by  creating  a  sinking  fund  which  will  increase  by  invest- 
ment. The  sum  of  the  investment  of  annual  instalments  with 
accrued  interest  is  supposed  to  equal  the  capital  at  the  end  of 
the  required  period. 


46 


THE   COST   OF  MINING 


PRESENT  VALUE  OF  AN  ANNUAL  DIVIDEND  OVER  —  -  YEARS  AT  —  -  PER 
CENT.  AND  REPLACING  CAPITAL  BY  REINVESTMENT  OF  AN  ANNUAL  SUM 
AT  4  PER  CENT. 


Years 

5  Per  Cent. 

6  Per  Cent. 

7  Per  Cent. 

8  Per  Cent. 

9  Per  Cent. 

10  Per  Cent. 

1 

.95 

.94 

.93 

.92 

.92 

.91 

2 

1.85 

1.82 

1.78 

1.75 

1.72 

1.69 

3 

2.70 

2.63 

2.56 

2.50 

2.44 

2.38 

4 

3.50 

3.38 

3.27 

3.17 

3.07 

2.98 

5 

4.26 

4.09 

3.93 

3.78 

3.64 

3.51 

6 

4.98 

4.74 

4.53 

4.33 

4.15 

3.99 

7 

5.66 

5.36 

5.09 

4.84 

4.62 

4.41 

8 

6.31 

5.93 

5.60 

5.30 

5.04 

4.79 

9 

6.92 

6.47 

6.08 

5.73 

5.42 

5.14 

10 

7.50 

6.98 

6.52 

6.12 

5.77 

5.45 

11 

8.05 

7.45 

6.94 

6.49 

6.09 

5.74 

12 

8.58 

7.90 

7.32 

6.82 

6.39 

6.00 

13 

9.08 

8.32 

7.68 

7.13 

6.66 

6.24 

14 

9.55 

8.72 

8.02 

7.42 

6.91 

6.46 

15 

10.00 

9.09 

8.34 

7.79 

7.14 

6.67 

16 

10.43 

9.45 

8.63 

7.95 

7.36 

6.86 

17 

10.85 

9.78 

8.91 

8.18 

7.56 

7.03 

18 

11.24 

10.10 

9.17 

8.40 

7.75 

7.19 

19 

11.61 

10.40 

9.42 

8.61 

7.93 

7.34 

20 

11.96 

10.68 

9.65 

8.80 

8.09 

7.49 

21 

12.30 

10.95 

9.87 

8.99 

8.24 

7.62 

22 

12.62 

11.21 

10.08 

9.16 

8.39 

7.74 

23 

12.93 

11.45 

10.28 

9.32 

8.52 

7.85 

24 

13.23 

11.68 

10.46 

9.47 

8.65 

7.96 

25 

13.51 

11.90 

10.64 

9.61 

8.77 

8.06 

26 

13.78 

12.11 

10.80 

9.75 

8.88 

8.16 

27 

14.04 

12.31 

10.96 

9.88 

8.99 

8.25 

28 

14.28 

12.50 

11.11 

10.00 

9.09 

8.33 

29 

14.52 

12.68 

11.25 

10.11 

9.18 

8.41 

30 

14.74 

12.85 

11.38 

10.22 

9.27 

8.49 

31 

14.96 

13.01 

11.51 

10.32 

9.36 

8.56 

32 

15.16 

13.17 

11.63 

10.42 

9.44 

8.62 

33 

15.36 

13.31 

11.75 

10.51 

9.51 

8.69 

34 

15.55 

13.46 

11.86 

10.60 

9.59 

8.75 

35 

15.73 

13.59 

11.96 

10.67 

9.65 

8.80 

36 

15.90 

13.72 

12.06 

10.76 

9.72 

8.86 

37 

16.07 

13.84 

12.16 

10.84 

9.78 

8.91 

38 

16.22 

13.96 

12.25 

10.91 

9.84 

8.96 

39 

16.38 

14.07 

12.34 

10.98 

9.89 

9.00 

40 

16.52 

14.18 

12.42 

11.05 

9.95 

9.05 

PARTIAL  AND   COMPLETE  COSTS 


47 


Annual    Rate 
of 
Dividend 

Number  of  years  of  life  required  to  yield  —  per  cent  interest,  and  in  addition  to  fur- 
nish annual  instalments  which,  if  re-invested  at  4  Per  Cent,  will  return  the  original 
investment  at  the  end  of  the  period. 

Per  Cent. 

5  Per  Cent. 

6  Per  Cent. 

7  Per  Cent. 

8  Per  Cent. 

9  Per  Cent. 

10  Per  Cent. 

6 

41.0 

— 

— 

— 

— 

— 

7 

28.0 

41.0 

— 

— 

— 

— 

8 

21.6 

28.0 

41.0 

— 

— 

—  . 

9 

17.7 

21.6 

28.0 

41.0 

— 

— 

10 

15.0 

17.7 

21.6 

28.0 

41.0 

— 

11 

13.0 

15.0 

17.7 

21.6 

28.0 

41.0 

12 

11.5 

13.0 

15.0 

17.7 

21.6 

28.0 

13 

10.3 

11.5 

13.0 

15.0 

17.7 

21.6 

14 

9.4 

10.3 

11.5 

13.0 

15.0 

17.7 

15 

8.6 

9.4 

10.3 

11.5 

13.0 

15.0 

16 

7.9 

8.6 

9.4 

10.3 

11.5 

13.0 

17 

7.3 

7.9 

8.6 

9.4 

10.3 

11.5 

18 

6.8 

7.3 

7.9 

8.6 

9.4 

10.3 

19 

6.4 

6.8 

7.3 

7.9 

8.6 

9.4 

20 

6.0 

6.4 

6.8 

7.3 

7.9 

8.6 

21 

5.7 

6.0 

6.4 

6.8 

7.3 

7.9 

22 

5.4 

5.7 

6.0 

6.4 

6.8 

7.3 

23 

5.1 

5.4 

5.7 

6.0 

6.4 

6.8 

24 

4.9 

5.1 

5.4 

5.7 

6.0 

6.4 

25 

4.7 

4.9 

5.1 

5.4 

5.7 

6.0 

26 

4.5 

4.7 

4.9 

5.1 

5.4 

5.7 

27 

4.3 

4.5 

4.7 

4.9 

5.1 

5.4 

28 

4.1 

4.3 

4.5 

4.7 

4.9 

5.1 

29 

3.9 

4.1 

4.3 

4.5 

4.7 

4.9 

30 

3.8 

3.9 

4.1 

4.3 

4.5 

4.7 

Let  us  now  return  to  the  problem  of  fixing  the  time  for  the 
amortization  of  invested  capital.  As  remarked  above,  this  is 
easy  in  the  case  of  a  worked-out  mine.  To  do  it  accurately  in 
the  case  of  a  living  and  prosperous  mine  is,  frankly,  impossible. 
But  as  this  is  a  vital  question  for  every  investor  it  is  absolutely 
necessary  to  give  an  answer,  be  it  correct  or  not.  For,  whether 
the  investor  realizes  it  or  not,  he  is  always  staking  his  capital 
on  the  probability  of  having  it  returned  within  a  certain  time. 
In  other  words,  he  is  gambling  on  the  life  of  the  mine.  If  a  man 
invests  money  in  a  mining  stock  which  yields  only  5  per  cent,  on 


48 


THE  COST  OF  MINING 


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50  THE  COST  OF  MINING 

the  price  he  pays  for  it,  and  if  at  the  same  time  he  can  get  5  per 
cent,  on  a  well-secured  bond,  he  must  calculate  that  the  mine  is 
as  permanent  as  the  bond.  If  he  gets  a  dividend  of  10  per  cent, 
and  calculates  that  5  per  cent,  is  a  sufficient  interest  on  his  money, 
it  follows  that  he  is  counting  on  a  life  of  at  least  fifteen  years 
for  the  mine. 

It  happens  that  the  probable  life  of  mines  varies  between 
wide  limits.  In  the  case  of  coal,  building  stone,  cement,  iron 
ore  (and  in  sporadic  cases  among  precious  metal  ores) ,  it  has  been 
proved  possible  to  find  enough  ore  in  a  few  years  to  assure  the 
life  of  the  enterprise  twenty  or  more  years  in  advance.  Of 
course  the  period  of  activity  in  sight  is  the  minimum  amortiza- 
tion period;  the  longer  the  period  the  more  stable  the  invest- 
ment, because  the  longer  the  life  the  greater  the  probability  of 
equalizing  vicissitudes.  But  in  general  the  mines  that  can  see 
ahead  twenty  years  or  more  are  rare.  Many  profitable  ones 
have  not  a  single  year's  ore  in  sight  and  yet  the  probabilities 
may  be  in  favor  of  a  considerable  life.  The  only  means  by  which 
one  may  form  an  opinion  of  the  probabilities  are  acquaintance 
with  the  history  of  mines  and  ore  deposits,  and  acquaintance 
with  the  state  of  development  of  the  property,  the  rate  of  ex- 
traction, the  ore  in  sight,  and  the  soundness  of  the  management. 
It  will  be  quite  useless  to  attempt  here  any  discussion,  that  would 
have  any  approach  to  adequacy,  of  these  factors.  I  can  go  no 
further  than  to  give  a  table  showing  the  length  of  life  and  rate 
of  amortization  that  seem  to  me  reasonable  in  a  variety  of  cases. 
It  is  impossible  to  fill  out  the  various  factors  even  in  all  the  cases 
to  which  I  refer.  The  cardinal  point  for  the  reader's  attention 
is  the  varying  life  estimate  for  various  types  of  mines,  and  the 
highly  variable  rate  of  amortization  that  this  estimate  imposes. 

How  THESE  FIGURES  INTEREST  THE  INVESTOR 

The  question  is  often  asked,  What  bearing  do  these  theoret- 
ical or  half -forgotten  questions  about  capital  originally  invested, 
and  its  theoretical  retirement,  have  for  the  investor  who  buys  to 
sells  stocks  in  mining  properties  at  valuations  that  have  not  the 
slightest  reference  to  the  original  investment  or  how  it  is 
disposed  of?  To  this  various  answers  may  be  given.  I  have 
already  pointed  out,  but  may  as  well  repeat  (it  cannot  be  repeated 
too  often),  that  exactly  the  same  considerations  apply  to  the 


PARTIAL  AND  COMPLETE  COSTS  51 

extinguishment  of  the  price  paid  for  a  share  of  stock,  which  is 
the  form  in  which  investment  is  made  by  the  average  man,  as 
apply  to  the  capital  used  to  build  a  mill.  To  those  who  say  that 
people  who  buy  mining  shares  never  think  of  such  things  I  answer 
that  this  applies  only  to  the  "  suckers."  In  some  places  they  are 
more  euphoniously  called  "  lambs."  The  most  important  inves- 
tors in  mining  property  do,  most  emphatically,  take  these  facts 
into  consideration.  It  is  no  argument  to  say  that  mining  shares 
are  mainly  used  as  counters  in  a  game.  That  is  partly  true. 
That  it  is  true  at  all,  to  any  greater  extent  in  the  case  of  mines 
than  for  other  securities,  is  due  only  to  the  fact  that  a  portion  of 
the  public  is  imposed  upon  by  false  analogies.  In  other  words, 
they  are  often  induced  to  buy  highly  speculative  mining  stocks 
on  the  same  income  basis  as  they  buy  the  soundest  securities. 
The  very  mining  shares  that  I  have  called  " highly  speculative" 
might  in  many  instances  at  a  sane  valuation  be  just  as  " sound" 
as  the  soundest.  • 

A  sound  business  must  be  a  paying  business;  one  that  is  good 
for  both  interest  and  principal.  The  great  fault  with  the  min- 
ing business  from  the  point  of  view  of  the  moderate  investor  is 
that  it  is  very  easy  for  the  sake  of  a  fair  amount  of  interest  to 
lose  the  principal.  There  is  no  need  of  this.  By  studying  out 
the  vital  question  of  the  life  of  a  mine  with  its  concurrent  rate  of 
amortization,  and  by  steadily  refusing  to  believe  that  the  cur- 
rent construction  is  "capital/'  one  may  eliminate  overvalued 
properties  pretty  rapidly.  It  is  a  good  rule  not  to  buy  stocks 
in  concerns  that  are  too  wise  to  issue  full  reports.  If  there  is  \\ 
any  business  in  the  world  where  a  full  knowledge  of  certain  ele- 
mental facts  is  necessary  for  a  safe  and  sane  investment  it  is 
surely  mining. 

Furthermore,  at  the  last  analysis  the  price  of  a  commodity 
must  be  governed  by  its  cost.  It  is  highly  important,  therefore, 
to  know  when  prices  are  excessive  and  therefore  unstable.  It 
is  one  of  the  objects  of  this  book  to  show  what  the  cost  of  pro- 
duction on  a  grand  scale  in  various  important  products  of  mines 
really  is.  In  such  computations  the  capital  charges  are  a  vital 
factor  and  I  have  thought  it  desirable  to  explain  as  fully  as  pos- 
sible my  conception  of  a  proper  treatment  of  them  in  order  that 
the  reader  may  be  able  to  judge  for  himself  the  justness  of  my 
conclusions. 


CHAPTER  IV 

STATISTICS  OF  COAL  PRODUCTION 

Growth  of  the  coal  industry  in  the  United  States  —  Production  of  the  dif- 
ferent states  —  Total  production  to  end  of  1907  —  Prices  of  coal  —> 
Coal  resources  of  the  country  —  Coal  production  of  the  world. 

THE  following  statistics  on  the  production,  growth,  prices, 
and  resources  of  the  coal-mining  industry  of  the  United  States 
is  taken,  with  a  few  comments,  from  the  pamphlet  issued  by  the 
United  States  Geological  Survey  on  the  Production  of  Coal  in 
1907.  It  is  not  likely  that  any  other  statement  to  be  had  gives 
a  truer  perspective  of  the  essential  features  of  this  business, 
which  may  justly  be  said  to  be  one  of  the  great  fundamental 
elements  of  the  prosperity  of  the  nation.  Nothing  can  be  more 
important  than  that  the  public  at  large  shall  be  acquainted  with 
the  real  condition  of  this  industry,  for  it  is  not  unlikely  that 
good  public  policy  will  require  some  changes  in  the  conduct  of 
it,  and  without  the  support  of  public  opinion  nothing  beneficial 
can  be  done. 

COAL  STATISTICS 

"  The  combined  production  of  anthracite  and  bituminous  coal 
in  the  United  States  in  1907  amounted  to  a  little  more  than 
480,360,000  short  tons. 

"  With  an  average  of  30  cars  of  coal  to  the  train,  and  of  50 
tons  to  the  car,  the  number  of  trains  required  to  transport  this 
product  was  320,300,  and  the  combined  length  of  these  trains 
would  extend  two  and  two-thirds  times  around  the  world  at  the 
equator.  The  hole  left  in  the  ground  by  the  extraction  of  this 
fuel  is  equal  to  17,585,000,000  cu  ft.,  and  if  the  entire  quantity  of 
coal  extracted  were  built  into  one  cube,  it  would  have  the  dimen- 
sions of  2605  ft.,  or  nearly  half  a  mile  on  each  edge.  A  rectan- 
gular column  with  a  1000-ft.  base  to  represent  the  coal  production 
of  the  United  States  in  1907  would  extend  nearly  3.4  miles  into 

the  air." 

52 


STATISTICS  OF  COAL  PRODUCTION  53 

"  Some  idea  of  the  growth  of  the  coal-mining  industry  within 
the  last  quarter  of  a  century  is  shown  by  the  fact  that  in  1907 
the  production  was  considerably  more  than  double  that  of  1898, 
more  than  three  times  that  of  1890,  more  than  four  times  that  of 
1886,  and  considerably  more  than  five  times  that  of  1881. 

"  Compared  with  1906,  when  the  total  production  amounted 
to  414,157,278  short  tons,  valued  at  $513,079,809,  the  output  in 
1907  showed  an  increase  of  66,206,146  short  tons,  or  15.99  per 
cent,  in  quantity,  and  of  $101,719,089,  or  19.83  per  cent,  in  value. 
Of  this  increase,  12,787,412  long  tons,  or  14,321,901  short  tons, 
were  in  the  production  of  Pennsylvania  anthracite,  and  51,884,- 
245  tons  in  the  production  of  bituminous,  semi-bituminous,  sub- 
bituminous,  lignite,  and  scattering  lots  of  anthracite.  The  value 
of  the  Pennsylvania  anthracite  production  increased  $31,666,362, 
and  the  total  value  of  the  other  grades  of  coal  showed  an  increase 
of  $70,052,727.  It  is  worthy  of  note  that  of  the  31  states  and 
territories  of  the  Union  in  which  coal  was  produced  during  1907, 
there  were  only  two  which  did  not  participate  in  the  general 
increased  production.  The  two  exceptions  were  California  and 
Oregon,  both  unimportant  as  coal-producing  states,  both  on  the 
Pacific  coast,  and  the  decrease  in  both  states  being  due  to  the 
same  cause  —  the  largely  increased  production  of  fuel  oil  in  Cali- 
fornia and  its  use  for  railroad  and  manufacturing  purposes.  The 
percentages  of  increase  in  the  various  states  ranged  from  1.79 
in  Maryland  to  51  in  Michigan,  and  in  only  three  cases  where 
the  production  increased  was  the  percentage  of  increase  in  value 
less  than  the  percentage  of  increase  in  quantity.  These  three 
exceptions  were  Alabama,  Illinois,  and  Indiana.  The  largest 
increase  in  quantity  was  in  the  production,  of  Pennsylvania  bitu- 
minous coal,  which  showed  an  increase  of  20,849,971  short  tons, 
with  a  gain  of  $25,373,375  in  value.  Pennsylvania  anthracite 
showed  the  next  largest  gain  in  quantity,  the  increase  in  this  out- 
put being  14,321,901  short  tons,  while  the  gain  in  value  exceeded 
that  of  Pennsylvania  bituminous  coal,  amounting  to  $31,666,362. 
The  total  increase  in  Pennsylvania's  production  was  35,171,872 
short  tons,  while  the  aggregate  value  of  Pennsylvania's  produc- 
tion showed  a  gain  of  $57,039,737.  Illinois,  the  second  state  in 
coal-producing  importance,  was  second  in  increased  production, 
with  a  gain  of  9,837,042  short  tons  in  quantity  and  $9,924,320  in 
value.  West  Virginia,  the  third  in  producing  importance,  was 


54  THE  COST  OF  MINING 

third  in  increased  production,  with  a  gain  of  4,801,233  short 
tons  in  quantity  and  $6,794,691  in  value.  Ohio,  fourth  in  rank, 
was  fourth  in  amount  of  increased  output,  showing  a  gain  of 
4,410,779  short  tons  and  $4,978,166.  The  total  increase  in  the 
production  of  anthracite  and  bituminous  coal  in  the  United  States 
in  1907  was  about  10  per  cent,  larger  than  the  total  coal  pro- 
duction in  1877,  thirty  years  before. 

"  An  interesting  fact  presented  by  the  statistics  of  the  produc- 
tion of  coal  in  the  United  States  is  that  in  each  decade  the  out- 
put has  been  practically  doubled.  Up  to  the  close  of  1865  the 
total  production  had  amounted  to  284,890,055  tons.  In  the 
decade  from  1866  to  1875,  inclusive,  the  production  amounted  to 
419,425,104  tons,  making  the  total  production  up  to  the  close 
of  1875,  704,315,159  tons.  In  the  following  decade,  from  1876 
to  1885,  inclusive,  the  production  amounted  to  847,760,319  tons, 
something  more  than  double  the  total  production  up  to  the  begin- 
ning of  that  decade.  At  the  close  of  1885  the  total  production 
amounted  to  1,552,075,478  tons,  and  the  production  for  the  10 
years  ending  with  1895  was  1,586,098,641  tons,  and  the  total 
production  at  the  close  of  1895  amounted  to  3,138,174,119  short 
tons.  In  the  decade  ending  December  31,  1905,  the  total  pro- 
duction amounted  to  2,832,402,746  short  tons,  and  the  grand 
total  from  the  beginning  of  coal  mining  amounted  to  5,970,576,- 
865  short  tons.  The  average  annual  production  from  1896  to 
1905  was  283,240,275  short  tons,  compared  with  which  the  aver- 
age production  in  1906  and  1907  (447,260,351  short  tons)  shows 
an  increase  of  164,020,076  tons,  or  58  per  cent. 

"  This  great  increase  in  the  production  of  coal,  when  consid- 
ered with  the  increase  in  the  population,  furnishes  some  further 
interesting  comparisons.  Going  back  for  a  period  of  a  little 
over  50  years,  or  to  the  middle  of  the  last  century,  and  comparing 
the  statistics  of  coal  production  with  the  increased  population, 
it  is  found  that  in  1850,  according  to  the  United  States  census 
for  that  year,  the  production  of  coal  amounted  to  6,445,681  tons, 
when  the  population  of  the  country  amounted  to  23,191,876 
persons.  The  per  capita  production  of  coal  in  that  year  is  thus 
seen  to  have  been  0.278  ton.  In  1860,  or  10  years  later,  the  popu- 
lation was  31,443,321  persons,  and  the  coal  production  amounted 
to  16,139,736  tons,  or  an  average  of  0.514  ton  per  person.  At 
the  census  of  1$70  the  population  of  the  United  States  amounted 


STATISTICS   OF  COAL  PRODUCTION  55 

to  38,558,371;  the  coal  production  in  that  year  amounted  to 
36,806,560  short  tons,  a  per  capita  average  of  0.96  ton.  Ten 
years  later,  when  the  population  was  50,189,209,  the  coal  output 
amounted  to  76,157,944  short  tons,  or  1.52  tons  per  capita.  In 
1890  the  population  had  grown  to  63,069,756,  an  increase  of  25 
per  cent,  over  1880,  while  the  coal  production  had  grown  to 
157,770,963  short  tons,  or  a  per  capita  output  of  2.52  tons.  At 
the  taking  of  the  Twelfth  Census,  in  1900,  the  increase  in  popula- 
tion amounted  to  22  per  cent.,  the  total  number  of  persons  re- 
ported being  76,303,387,  while  more  than  70  per  cent,  had  been 
added  to  the  coal  production,  with  a  total  of  269,684,027  short 
tons,  or  an  average  of  3.53  tons  for  each  inhabitant.  In  other 
words,  while  the  population  from  1850  to  1900  showed  an  increase 
of  230  per  cent,  the  production  of  coal  increased  4,084  per  cent. 
The  Director  of  the  Bureau  of  the  Census,  Hon.  S.  N.  D.  North, 
estimates  the  population  of  the  United  States  on  June  1,  1907,  at 
about  85,500,000  persons,  making  the  per  capita  production  in 
that  year  5.6  tons;  that  is,  in  less  than  60  years  the  per  capita 
production  of  coal  in  this  country  has  increased  from  a  little 
more  than  a  quarter  of  a  ton  to  5^  tons.  It  is  true  that  in  the 
earlier  years  the  proportion  of  wood  used  for  fuel  was  larger 
than  it  is  to-day,  but  the  actual  consumption  of  wood  at  this 
time  is  little,  if  any,  less  than  it  was  50  years  ago,  and  is  probably 
greater.  It  must  also  be  remembered  that  in  addition  to  the 
great  increase  in  the  consumption  of  coal  per  head  of  population 
there  has  been  a  great  increase  in  the  use  of  oil  for  fuel  purposes, 
while  natural  gas  still  remains  an  important  factor  in  this  regard. 
"The  total  number  of  men  employed  in  the  coal  mines  of  the 
United  States  in  1907  was  680,492,  against  640,780  in  1906  and 
626,035  in  1905.  Of  the  total  number  of  men  who  were  employed 
in  1907,  167,234  were  employed  in  the  anthracite  mines  of  Penn- 
sylvania, while  the  bituminous  and  lignite  mines  gave  employment 
to  513,258  men.  In  1906  the  anthracite  mines  gave  employment 
to  162,355  men  and  in  1905  to  165,406  men.  The  bituminous 
workers  numbered  478,425  in  1906  and  460,629  in  1905.  The 
average  number  of  days  worked  in  the  anthracite  region  in  1907 
was  220,  against  an  average  of  195  in  1906  and  215  in  1905. 
The  bituminous  mines  worked  an  average  of  234  days  in  1907, 
213  days  in  1906,  and  211  days  in  1905.  The  average  production 
for  each  employee  in  the  anthracite  region  of  Pennsylvania  in  1907 


56 


THE  COST  OF  MINING 


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STATISTICS    OF  COAL  PRODUCTION 


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THE  COST  OF  MINING- 


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STATISTICS   OF   COAL  PRODUCTION 


59 


was  512  tons,  against  439  tons  in  1906  and  470  in  1905.  The 
average  production  for  each  employee  in  the  bituminous  mines 
in  1907  was  769  tons,  against  717  tons  in  1906  and  684  tons  in 
1905.  The  average  daily  production  per  man  in  the  anthracite 
region,  which  decreased  from  2.41  tons  in  1903  to  2.35  tons  in 
1904  and  to  2.18  tons  in  1905,  increased  to  2.25  tons  in  1906  and 
to  2.33  tons  in  1907.  The  average  production  per  day  by  each 
employee  in  the  bituminous  mines,  which  increased  steadily  from 
3.02  in  1903  to  3.15  in  1904  and  to  3.24  in  1905  and  3.36  in  1908, 
fell  off  to  3.29  in  1907. 

TOTAL  PRODUCTION  OF  COAL  IN  THE  UNITED  STATES  FROM  1814  TO  THE 
CLOSE  OF  1907,  IN  SHORT  TONS 


Pennsylvania 

Virginia 

Kentucky 

Illinois 

Ohio 

Pennsylvania 

Missouri 

Total  

A  nthracite 
1,931,510,321 

57,229,152 

122,404,574 

645,868,309 

492,769,358 

Bituminous 
1,846,069,253 

97,618,106 

Indiana 

Alabama 

Tennessee 

Iowa 

Arkansas 

North 
Carolina 

Maryland 

Washing- 
ton 

Total  .... 

159,440,390 

164,734,310 

84,304,601 

141,608,792 

23,756,401 

476,805 

147,606,548 

43,108,697 

Michigan 

Georgia 

California 

West 
Virginia 

Colorado 

Wyoming 

Kansas 

Utah 

Total  

13,842,943 

8,123,696 

5,030.945 

434,198,539 

112,668,336 

77,818,' 

65 

91,176,204 

18,837,182 

Oklahoma 
(Ind.T.) 

Oregon 

Montana 

New 
Mexico 

Texas 

North 
Dakota 

Miscella- 
neous 1 

Total 

Total  

39,845,015 

1,790,392 

24,739,133 

22,325,432 

14,444,948 

2,784,258 

38,966,162 

6,865,097,567 

The  following  table  shows  the  variation  in  the  average  price 
of  run  of  mine  bituminous  coal  in  the  various  states  since  1903. 
For  the  year  1907  is  added  a  column  showing  the  output  in  tons 
per  man  per  day.  It  will  be  seen  that  the  price  is  roughly  in 
inverse  proportion  to  this  output.  It  will  be  shown  later  that, 
given  equivalent  conditions,  the  labor  cost  is  about  the  same 
throughout  the  country.  It  must  be  borne  in  mind  that  condi- 


60 


THE  COST  OF  MINING 


AVERAGE  PRICE  PER  SHORT  TON  FOR  COAL  AT  THE  MINES  SINCE   1903,   BY 
STATES  AND  TERRITORIES 


State  or  Territory 

1903 

1904 

1905 

1906 

1907 

Tons  per 
Man 
per  Day 

Alabama    
Arkansas    
California  
Colorado  
Georgia  
Idaho  
Illinois    
Indiana    
Iowa  
Kansas  

$1.22 
1.51 
(a)  2.86 
.23 
(6)    .26 
.10 
.17 
.23 
.65 
.52 

$1.20 
1.54 
(a)  4.74 
1.31 
(6)  1.22 
(c)  3.95 
1.10 
1.11 
1.61 
1.52 

$1.21 
1.49 

(a)  4.97 
1.22 
(6)  1.29 
(c)  3.03 
1.06 
1.05 
1.56 
1.46 

$1.34 
1.61 
(a)2.55 
1.26 
1.28 
(c)  3.93 
1.08 
.08 
.60 
.49 

$1.29 
1.68 
(a)  3.81 
1.40 
1.38 
(d)  4.10 
1.07 
1.08 
1.62 
1.52 

2.75 
2.76 

2.94 

3.59 
3.30 
2.11 
2.62 

Kentucky  
Maryland  

.06 

.48 

1.04 
1.19 

.99 
1.14 

.02 
.19 

1.06 
1.20 

2.98 
3.58 

Michigan    
Missouri  
Montana  
New  Mexico 

.97 
.61 
.64 
37 

1.81 
1.63 
1.61 
1  31 

1.71 
1.58 
1.72 
1.33 

.80 
.63 

.77 
.34 

1.80 
1.64 
1.94 
1.46 

2.19 
2.21 
2.75 
329 

North  Carolina   .  .  . 
North  Dakota  .... 
Ohio  

(•) 
1.50 
1.29 

(«) 
1.43 
1.09 

(«) 
1.34 
1.04 

.54 
.09 

1.61 
1.10 

Oklahoma  (Indian 
Territory)    
Oregon   
Pennsylvania  bitu- 
minous   
Tennessee  .  .  . 

1.82 
2.43 

1.18 
1.25 

1.82 
2.18 

.96 
1  18 

1.76 

2.58 

.96 
1  14 

1.92 
2.66 

1.00 
1.22 

2.04 
2.34 

1.04 
1  25 

2.01 

3.61 
2.44 

Texas  

1.62 

1.66 

1.64 

1.66 

1.69 

1.61 

Utah         

1.20 

1.30 

1.35 

1.36 

1.52 

3.43 

Virginia    
Washington  
West  Virginia  
Wyoming  

.96 
1.69 
1.17 
1.24 

.86 
1.63 
.88 
1.30 

.88 
1.79 
.86 
1.31 

.98 
1.80 
.95 
1.31 

1.02 
2.09 
.99 
1.56 

2.93 
2.27 
3.64 
3.42 

Total  bituminous 
Pennsylvania   an- 
thracite     

1.24 
2.04 

1.10 

1.90 

1.06 
1.83 

1.11 

1.85 

1.14 
1.91 

General  average 

1.41 

1.26 

1.21 

1.24 

1.28 

— 

(a)  Includes    Alaska.     (6)  Includes    North    Carolina,     (c)  Includes    Ne- 
braska,    (d)  Includes  Nebraska  and  Nevada,     (e)  Included  in  Georgia. 


STATISTICS   OF   COAL   PRODUCTION 


61 


tions  that  impose  high  costs  of  living  will  increase  the  labor 
cost.  This  is  particularly  evident  in  comparing  the  price  of  coal 
and  the  output  per  man  in  the  Rocky  Mountain  states  with  those 
of  the  Mississippi  Valley. 

COAL  PRODUCTION  IN  THE  CHIEF  COUNTRIES  OF  THE  WORLD 
(In  metric  tons  of  2204  Ibs.) 


Countries 

1904 

1905 

1906 

1907 

Asia: 

China 







10,450,000 

India    

7,682,319 

7,921,000 

9,783,250 

11,200,000 

Japan     .      .  . 

11,600,000 

11,895,000 

12,500,000 

12,890,000 

Australia  : 

New  South  Wales 

6,116,126 

6,035,250 

7,748,384 

7,850,000 

New  Zealand  .... 

1,562,443 

1,415,000 

1,600,000 

1,784,000 

Other  Australia  .  . 

769,723 

805,000 

870,000 

900,000 

Europe  : 

Austria    Hungary 

(c)  

40,334,681 

40,725,000 

37,612,000 

39,876,511 

Belgium  

23,380,025 

21,844,200 

23,610,740 

23,824,499 

France  

34,502,289 

36,048,264 

34,313,645 

37,022,556 

Germany  (c)    

169,448,272 

173,663,774 

193,533,259 

205,542,688 

Italy  

359,456 

307,500 

(e)  300,000 

(e)  225,000 

Russia    

19,318,000 

17,120,000 

16,990,000 

17,800,000 

Spain  (c)    

3,123,540 

3,199,911 

3,284,576 

(e)  3,250,000 

Sweden  

320,984 

331,500 

(e)  265,000 

\*S    ujuwj  \j\s\j 

305,000 

United  Kingdom  . 

236,147,125 

239,888,928 

251,050,809 

267,828,276 

North  America  : 

Canada  







Western  

2,619,816 

3,183,909 

3,717,816 

4,780,301 

Eastern    

4,194,939 

4,775,802 

6,196,360 

5,730,060 

United  States  

318,275,920 

351,120,625 

375,397,204 

430,430,183 

South  Africa  (a)  .  . 

3,015,000 

3,218,500 

(e)  3,900,000 

3,945,043 

Other  countries  (e) 

4,250,000 

4,550,000 

5,500,000 

3,475,780 

Total    . 

867,020,658 

928,049,163 

988,173,043 

1,089,110,496 

(a)  Transvaal,    Natal   and   Cape   of   Good   Hope,     (c)  Includes  lignite. 
(e)  Estimated. 


62 


THE   COST   OF  MINING 


AREAS,  ESTIMATED  TONNAGE,  AND  PRODUCTION  OF 
[A  =  Anthracite.     B  =  Bituminous. 


State  and  Field 

AREA  IN  SQUARE  MILES 

Kind 
of 
Coal 

Estimated  Orig- 
inal Coal  Supply 
in  Short  Tons. 
Coal  Both  Easily- 
Accessible  and 
Accessible  with 
Difficulty 

PRODUCTION  m  SHORT 
TONS 

Contain- 
ing 
Work- 
able 
Coals 

May 
Con- 
tain 
Work- 
able 
Coals 

Coal 
Under 
Heavy 
Cover 

1906 

Total  to 
January  1, 
"1908,  In- 
cluding 
Waste 

Alabama: 
Warrior     and     Plateau 
fields 

7,845 
325 
260 

6,000 

— 

B 
B 
B 
L 

63,513,000.000 
2,994,000,000 
2,396,000,000 

11,301,993 
1,635,907 
170,063 

— 

Cahaba  field  
Coosa  field          

Lignite  field  

Total 

8,430 
30 

1.584 
100 

6,000 
5,900 

— 

B 

B 
L 

68,903,000,000 
60,000,000 

1,797,000,000 
90.000,000 

13,107,963 
1    

1,934,673 

247,000,000 

Arkansas  : 
Bituminous  field  
Lignite  field  
Total 

1,684 
500? 

600 
1,380 
20 
1,080 
6,000 
700 
350 

5,900 

3,700 

480 

520 
2,300 

S,  B 

S 
B.  S 
S 
B 
B,  A 
B,  S  A 
B,  S 

1,887,000,000 
1,000,000,000 

13,590,000,000 
21,428,000,000 
453,000,000 
24,462,000,000 
271,810,000,000 
39,639,000,000 
388,000,000 

25,290 

1,544,776 
177,718 
1,300 
6,572,673 
1,143,310 
5,407 
666,034 

36,000,000 
7,000,000 

Colorado: 
Denver  region  

North  Park  field  
Trinidad  field 

Uinta  region    

Yampa  field    
Scattered  fields  
Total    

10,130 

167 
200 

4,180 
I  200 

2,820 

B 
S,  B 
B 
B 
B 
B 

B 
B 

371,770,000,000 

10,111  218 

169,000,000 
12,000,000 

968,000,000 
239  000  000 

933,000,000 
600,000,000 
240  000  000  000 

353,548 

5,882 
38  434  363 

Idaho 

35,600 
6,500 
12.560 
3,100 

10,270 
6,400 

5,640 
15,780 

Indiana    

44,169,000,000 
29,160,000,000 
7,022,000,000 

67,787,000,000 
36,241,000,000 

11  895  252 

6,798,609 
6,423,979 

3,768,651 
5,884,996 

212,000,000 
136,000,000 

Kentucky: 
Eastern  Kentucky  
Western  Kentucky  .... 
Total    

16,670 

8,800 
455 
11,000 
7,500 
16,700 

32,300 
754 

47 
516 

450 

6,300 
6,100 

100 
2,500 
8,000 

875 

— 

L 
B 
B 
L 
B 

V 

s 

B 
S 
B 
S.  L 

104,028,000,000 

8,044,000,000 
12,000,000,000 

40,000,000,000 

279,500,000,000 
6,560,000,000 

2,000,000,000 
2,000,000,000 
10,000,000,000 
3,000,000,000 

9,653,647 

5,108,539 
1,473,211 

3,983,378 

557,148 
1,058,763 
13,550 
200,460 

184,000,000 

221,000,000 
21,000,000 

146,000,000 

Maryland  

Mississippi  

Montana: 
Fort  Union  region    .    .  . 
Bull  Mountain  field  .    .  . 
Red  Lodge  and  Bridger 
fields...  
Judith  Basin  region  .    .  . 
Assinniboine  region  .    .  . 
Yellowstone  region  .    .  . 
Scattered  fields  

Total    

New  Mexico: 
Raton  field    

34,067 

1,360 
11,600 
375 

17,575 

5,000 

B 

S 
B,  A,  S 

303,060,000,000 

30,805,000,000 
131,375,000,000 
1,600,000,000 

1,829,921 

1,292,241 
604,517 
67,955 

37,000,000 

San  Juan  region  
Scattered  fields  
Total    

13,335 

— 

5,000 

163,780,000,000 

1,964,713 

33,000,000 

STATISTICS    OF   COAL   PRODUCTION 


63 


THE  VARIOUS  COAL-FIELDS  OF  THE  UNITED  STATES 
S  =  Sub-bituminous.     L  =  Lignite] 


State  and  Field 

AREA  IN  SQUARE  MILES 

Kind 
of 
Coal 

Estimaed  Origi- 
nal Coal  Supply 
in  Short  Tons, 
Coal  Both  Easily 
Accessible  and 
Accessible  with 
Difficulty 

PRODUCTION  IN  SHORT 
TONS 

Contain- 
ing 
Work- 
able 
Coals 

May 
Contain 
Work- 
able 
Coals 

Coal 
Under 
Heavy 
Cover 

1906 

Total  to 
Januarv  1, 
1908.  Includ- 
ing Waste 

North  Carolina  

60 
31,240 

3,900 
360 



B 

L 

L 

200,000,000 
500,000,000,000 

317,542 

1,000,000 

North  Dakota: 

Turtle  Mountain  field  .  . 
Total 

31,240 

12,660 
10,000 
230 

480 
14,200 

4,260 

— 

B 
B 

S 

A 
B 

500,000,000,000 

86,028,000,000 
79,278,000,000 
1,000,000,000 

21,000,000,000 
112,574,000,000 

317,542 

25,552,950 

2,924,427 
109,641 

71,282,411 
129,293,206 

4,000,000 

739,000.000 
60,000,0000 
2,000,000 

Ohio 

Oklahoma  

Pennsylvania  : 
Anthracite  region  
Bituminous  fields    
Total    

14,680 
2,000 

4,400 
1.000 

4,000 

— 

L 

B 
L 

133,574,000,000 
10,000,000,000 

25,665,000,000 

200,575,617 
5,766,690 

5,652,000,000 

South  Dakota  

Tennessee: 
Bituminous  fields  
Lignite  fields  

Total    

Texas  : 
Bituminous  fields  
Lignite  fields  

5,400 

8,200 
2,000 

5,300 
53,000 

— 

B 
L 

25,665,000,000 

8,000,000,000 
23,000,000,000 

5,766,690 

839,985 

472,888 

126,000,000 

Total    

Utah: 
Uinta  region    
Southwestern  Utah 

10,200 

9,990 
3,140 

58,300 

1,500 
500 

B 

B,  A 
B,  S 

31,000,000,000 

150,970,000,000 

45,438,000,000 
50,000,000 

1,312,873 
1,701,674 

70,877 

22,000,000 

Scattered  fields  
Total    

Virginia  : 
Southwestern  fields  .... 
Brushy  Mountain  fields 
Richmond  fields  
Total 

13,130 

1,550 
200 
150 

2,000 

— 

B 
B 

196,458,000,000 

21,000,000,000 
900,000,000 
600,000,000 

1,772,551 

4,205,019 
49,860 

28,000,000 

1,900 

1,100 
17,000 

11,530 
905 
1,435 
4,855 
1,073 
320 
450 

3,060 
430 
240 
1.350 
960 

200 

2,830 
290 
20,750 
115 

B,  S 
B 

S 
S 
S 
B,  S 
B,  S 
B 
S 

22,500,000,000 

20,000,000,000 
231,039,000,000 

174,600,000,000 
1,000,000,000 
33,000,000,000 
199,152,000,000 
16,000,000,000 
133,000,000 
200,000,000 

4,254,879 

2,864,926 
87,791,580 

1,091,499 
5,451 
450,636 
2,122,253 
2,078,772 
385,383 

86,000,000 

64,000,000 
650,000,000 

Washington 

West  Virginia    

Wyoming: 
Fort  Union  region    .... 
Bighorn  Basin  region  .  . 
Hanna  field   
Green  River  region    .  .  . 
Hams  Fork  region    .... 
Black  Hills  region    .... 
Scattered  fields  
Total    
Total  for  United 
States  

20,568 
327,596 

6,240 
137,375 

23,985 
31,805 

- 

424,085,000,000 

6,133,994 

116,000,000 
10,218,000,000 

3,157,243,000,000 

414,157,278 

CHAPTER   V 

COST   OF  MINING  COAL 

Importance  of  the  business  —  Factors  governing  costs  —  Price  of  wages  a 
result  of  efficiency  —  Price  and  cost  of  coal  in  various  States  —  Esti- 
mates of  cost  for  various  places  —  Pittsburgh  Coal  Company  —  Capital 
charges  — 'Details  of  cost  of  coking  coal  in  Virginia  —  Illinois  field  — 
Coke  manufacture  and  anthracite  mining  —  Cost  of  coke  —  Cost  of 
anthracite  —  Philadelphia  and  Reading  Coal  and  Iron  Company  — 
Chance's  chart  of  costs  according  to  thickness  —  Public  policy  in  coal 
mining  —  Causes  of  waste  —  Limitation  of  waste  a  question  of  the 
value  put  on  coal  —  Desirability  of  extensive  consolidations  —  Capital 
required  for  coal-mining  expansion. 

MODERN  civilization  is  propelled  by  the  annual  combustion 
of  upward  of  1,200,000,000  tons  of  coal.  This  vast  use  of  power 
other  than  human  or  animal  muscle  is  the  basic  fact  in  the  might- 
iest revolution  in  industry,  in  art,  and  in  habits  that  the  human 
race  ever  experienced.  Every  time  we  press  a  button  to  turn 
on  an  electric  light,  every  time  we  enter  an  elevator  or  a 
street  car,  we  participate  not  only  in  a  human  revolution,  but  in 
a  great  geologic  fact;  for  the  mining  and  destruction  of  coal 
removes  some  of  the  important  strata  of  the  earth's  crust. 

Coal  mining  is  the  basis  and  dependence  of  other  kinds  of 
mining  just  as  it  is  of  other  industries.  And  farther,  since  coal 
mining  is  one  of  the  simplest  and  commonest  of  mining  opera- 
tions, it  serves  as  a  standard  by  which  the  complexity  and  cost  of 
other  kinds  of  mining  may  be  appraised. 

If  coal  were  not  so  abundant  and  widespread  its  use  could 
not,  of  course,  be  so  extensive  and  fundamental.  The  fact  of 
its  wide  distribution  is  the  most  powerful  element  in  the  con- 
duct of  the  business.  If  coal  were  not  cheap  it  could  not  be  so 
extensively  used;  it  would  not,  therefore,  be  so  valuable.  But 
because  it  is  cheap  it  is  often  wasted;  it  is  cheap  because  it  can  be 
offered  in  the  market  by  innumerable  competitors,  whose  aim 
is  not  the  wise  use  of  coal,  but  ready  money  profit  from  it.  Hence 

64 


COST   OF  MINING  COAL  65 

this  most  valuable  of  mineral  resources  has  been  in  considerable 
measure  crudely  and  greedily  exploited. 

The  cost  of  coal  to  the  consumer  depends  on  two  elements  that 
vary  widely:  (1)  Mining  and  (2),  Transportation;  but  since  the 
effect  of  the  latter  is  self-evident,  I  do  not  propose  to  discuss  it. 

FACTORS  THAT  INFLUENCE  COST  OF  MINING 

I.  The  cost  of  mining  coal  depends,  in  my  judgment,  upon 
the  following  factors: 

(a)    The  thickness  of  the  seam. 

(6)    The  purity  of  the  coal  in  the  seam. 

(c)  The  regularity  of  the  seam. 

(d)  The  geological  attitude  as  regards  angle  of  dip,  occurrence 
of  faults,  etc. 

(e)  The  climate,  cost  of  living,  etc. 
(/)    The  depth. 

(g}    The  amount  of  water  to  be  pumped. 

(h)    The  solidity  of  the  roof. 

(i)    The  presence  of  gas,  dust,  or  other  elements  of  danger. 

(/)    Topography  of  the  surface. 

Some  other  factors  may  influence  the  cost  in  a  minor  degree ; 
such  as  the  hardness  of  rock  encountered  in  development  work, 
hardness  of  coal,  cost  of  supplies,  etc. 

It  will  be  noted  that  I  have  mentioned  only  natural  condi- 
tions, leaving  out  the  factor  that  many  would  be  inclined  to 
place  first  on  the  list  —  the  rate  of  wages.  I  do  not  believe  that 
this  is  a  factor  at  all.  The  price  of  labor  is  determined  by  the 
natural  factors.  It  is  an  effect,  not  a  cause,  in  the  economy  of 
mining.  If  we  have  two  neighboring  districts  with  the  same 
natural  advantages,  but  in  which  the  rates  of  wages  are  differ- 
ent, that  difference  is  apparent,  not  real.  The  difference  will 
be  equalized  by  the  supply  and  demand  for  labor  as  automati- 
cally as  water  runs  down  hill.  If  a  mine  pays  lower  wages  than 
its  neighbor  it  will  have  poorer  men;  if  other  conditions  are  the 
same,  the  cost  will  be  the  same.  You  cannot  change  this  natural 
law;  it  is  like  the  force  of  gravity. 

LABOR  COST  AND  WAGES 

rhope  that  no  one  will  understand  this  dictum  to  mean  that 
where  natural  conditions  are  the  same,  the  wages  will  be  the  same, 


66  THE  COST  OF  MINING 

or  that  the  cost  of  labor  will  be  the  same;  on  the  contrary,  these 
things  vary  a  good  deal.  Management,  scale  of  operations, 
appliances  of  all  kinds  vary,  or  may  vary,  almost  without  limit 
among  various  enterprises.  These  factors  help  to  establish  wages 
and  labor  costs;  they  are  quite  independent  both  of  natural  con- 
ditions and  of  labor  conditions,  and  have  to  do  with  the  success 
or  failure  of  enterprises.  They  introduce  variations  in  cost 
that  are,  or  may  be,  equal  to  the  margin  of  profit  that  there  is 
in  the  business. 

How  LABOR  COSTS  MAY  DIFFER  WITH  SAME  RATE  OF  WAGES 

To  elaborate  a  little,  let  us  suppose  that  Smith  and  Jones  are 
two  rival  operators  in  neighboring  coal  mines  in  which  the  nat- 
ural conditions  are  exactly  the  same  and  in  which  coal  is  salable 
at  $1  per  ton.  There  are  only  two  mines  in  the  district  and  each 
can  produce  twice  its  actual  tonnage.  Smith  is  a  good  operator, 
with  sufficient  capital,  equipment,  development  and  ventilation. 
He  can  mine  coal  for  60  cents  per  ton.  Jones  is  a  poor  operator, 
and  his  mine  is  poorly  opened.  It  costs  him  $1  per  ton  to  pro- 
duce coal.  It  is  obvious  that  the  successful  and  opulent  Smith 
has  the  decision  as  to  how  great  a  difference  there  shall  be  in  labor 
costs  in  that  district.  He  can  prevent  Jones  from  making  a 
profit,  and  can  close  him  down  by  selling  coal  under  $1  per  ton, 
which  is  Jones's  cost.  It  is  obvious  that  the  difference  between 
labor  costs  here  will  be  approximately  as  6  is  to  10.  This  is  not 
due  to  the  rate  of  wages;  it  is  just  the  difference  between  Smith 
and  Jones. 

How  WAGES  MAY  DIFFER  AND  COSTS  BE  THE  SAME 

Now  let  us  suppose  that  Smith  and  Jones  are  2000  miles  apart 
and  each  sells  his  coal  at  a  point  midway  between  them  with 
equal  transportation  costs.  Smith  can  supply  the  market  and 
so  can  Jones,  and  each  wants  to  sell  all  he  can,  and  can  produce 
all  he  can  sell.  Smith  can  sell  without  loss  as  low  as  60  cents 
per  ton.  Jones,  if  he  pays  as  much  wages  as  Smith,  cannot  sell 
for  less  than  $1.  Neither  Jones  nor  his  employees  know  any- 
thing of  Smith's  superior  methods  and  appliances,  and  they  have 
no  means  of  living  except  by  selling  coal.  Obviously  under 
these  conditions  there  is  only  one  thing  to  do  —  work  for  less 
money.  So  Jones  fixes  his  wages  at  60  per  cent,  of  Smith's  wages 


COST  OF  MINING  COAL  67 

and  continues  business.  This  rate  is  fixed  by  the  efficiency  of 
Jones  as  against  Smith.  His  men  get  just  what  they  earn.  In 
other  words,  the  final  result  is  exactly  the  same  as  if  each  laborer 
were  in  business  for  himself. 

ACTUAL  COSTS 

Returning  now  to  the  natural  factors  that  govern  the  cost  of 
coal  mining,  we  find  that  their  number  and  importance  is  very 
considerable,  and  if  all  coal  were  to  be  mined  we  should  have 
enormous  differences  of  cost.  As  a  matter  of  fact,  these  great 
differences  do  not  at  present  exist  because  the  commercial  condi- 
tions of  the  country  cause  the  elimination  of  all  mines  except 
those  favorable  for  cheap  working.  This  results  from  the  fact 
that  there  is  in  this  country,  according  to  the  U.  S.  Geological 
Survey,  2,000,000,000,000  tons  of  coal  of  all  kinds  easily  acces- 
sible. This  coal  is  spread  over  an  area  of  500,000  sq.  m.,  and 
may  be  attacked  at  many  thousand  favorable  points.  The  unfa- 
vorable seams  will  have  to  await  to  be  worked  after  the  better 
ones  are  exhausted. 

PRICE  OF  COAL  AT  MINES 

According  to  the  excellent  review  of  the  "Production  of  Coal" 
for  1907,  published  by  the  U.  S.  Geological  Survey,  the  extreme 
variation  in  the  price  of  coal  at  the  mines  in  the  various  States 
is  only  from  99  cents  in  West  Virginia  to  $4.10  in  Idaho.  The 
last  figure  is  for  only  7500  tons  and  doubtless  represents  a  case 
where  an  isolated  but  unfavorable  seam  may  be  worked  because 
high  transportation  charges  prevent  the  introduction  of  coal 
from  other  places.  Leaving  out  such  abnormal  cases  and  con- 
sidering only  States  where  the  output  reaches  1  per  cent,  of  the 
production  of  the  country,  we  find  that  the  price  of  bituminous 
coal  at  the  mines  varies  only  between  99  cents  for  West  Virginia 
to  $1.68  for  Arkansas.  Pennsylvania  anthracite  is  valued  at 
$1.91,  but  I  shall  explain  later  that  the  cost  of  anthracite  is 
radically  different  from  that  of  bituminous  coal  and  no  compari- 
son should  be  made  except  with  very  careful  explanation. 

It  is  probable  that  the  figures  of  average  price  of  coal  at  the 
mines  give  the  best  general  idea  to  be  had  of  the  cost^of  mining 
throughout  the  country.  The  price,  of  course,  exceeds  the  cost, 
but  it  can  be  confidently  asserted  that  the  difference  is  not  over 


68 


THE   COST  OF  MINING 


10  to  15  cents  per  ton,  if  we  consider  the  whole  output  of 
States.  Within  given  fields  there  must  be  considerable  variation; 
some  mines  working  cheaply  and  with  large  profits,  while  others 
have  no  profits  at  all,  and  some,  if  all  capital  charges  were  cor- 
rectly made  against  them,  would  be  found  running  at  a  loss. 
But  it  is  quite  obvious  that  the  entire  industry  cannot  run  at  a 
loss  and  that  the  average  complete  cost  must  fall  inside  the  aver- 
age selling  price.  It  is  difficult  to  get  specific  figures  that  will 
illuminate  the  general  subject  as  accurately  as  the  broad  figures 
published  by  the  Survey,  and  I  doubt  if  we  can  form  a  better 
idea  of  average  costs  than  by  assuming  them  to  be  90  per  cent, 
of  the  selling  price.  This  assumption  gives  us  the  following  for 
bituminous  coal: 


SELLING  AND  COST  PRICES  OF  BITUMINOUS  COAL  —  RUN  OF  MINE. 

1903.  1904.  1905.  1906.  1907 

U.S.  price $1.24         $1.10         $1.06         $1.11        $1.14 

Cost    1.11  0.99  0.95  1.00         1.00 

United  States  average  price  for  5  years,  $1.13;  estimated  cost,  $1.00. 

Esti- 

1907  mated 

Price.  Cost. 

Pennsylvania    $1.03  j  $0.93 

West  Virginia     0.99      .        .     ,  .  0.90 

,,      ,      ,  i  or>     Appalachian 

Maryland 1.20  \     \T. ,  1.08 

Virginia     1.02  0.91 

Kentucky    1.06  J  0.95 

Illinois     1.07     Illinois  field.  0.96 

Alabama    1.29     Southern  field.  1.17 

Arkansas     1.68     Ozark  field.  1.50 

Colorado    1.40  1.26 

Wyoming 1.56          Rocky  1.40 

Utah      1.52         Mountain  1.37 

New  Mexico 1.46  field.  1.31 

Washington 2.09     Puget  Sound 

field.  1.88 

Michigan 1.80     Michigan  field.  1.62 

These  costs  are  intended  to  be  complete,  that  is,  to  cover 
both  operating  and  capital  charges.  I  shall  endeavor  to  give 
some  reasons  for  believing  them  to  be  fairly  accurate,  but  first 
let  me  disavow  any  intention  of  applying  them  to  any  particular 
property  or  district.  It  would  be  more  enlightening,  possibly, 
to  take  some  detailed  statements  of  costs  and  compare  and  digest 


COST  OF  MINING   COAL  69 

them.  But  such  statements  are  hard  to  get  and  I  must  confess 
that  those  I  have  been  able  to  secure  are  open  to  grave  question 
as  to  their  accuracy.  For  instance,  I  have  the  statements  of 
a  coal  company  operating  three  different  mines.  Detailed  state- 
ments of  operating  costs  for  each  month  for  each  mine  are  given 
for  a  period  of  years.  The  aggregate  tonnage  and  total  operating 
cost  may  be  figured  out  only  with  great  labor.  To  get  five  years' 
operation  averaged,  I  should  have  to  combine  180  different  cost 
statements.  If  this  were  necessary  to  secure  the  facts,  one  might 
be  heroic  enough  to  do  it,  but,  after  all,  it  would  only  give  the 
results  of  an  insignificant  fragment  of  a  single  field  and  a  single 
management.  But  far  worse  than  this,  after  making  this  com- 
pilation, I  should  still  doubt  its  accuracy  because  a  single  glance 
at  the  balance  sheet  reveals  the  fact  that  in  mining  1,000,000 
tons  of  coal,  $350,000  has  been  added  to  capital  charges.  The 
writing  off  of  such  charges  is  a  matter  of  judgment,  based  on 
familiarity  with  the  property  itself.  I  cannot  possibly  supply 
either  the  time  or  the  experience  required  to  form  a  judgment 
of  my  own  as  to  this  rate  of  depreciation,  and  yet,  in  a  business 
of  narrow  margin  like  that  of  bituminous  coal,  it  is  a  matter  of 
great  importance  whether  1  cent,  or  5  cents,  or  15  cents  per  ton 
must  be  added  for  depreciation. 

It  is  interesting  to  note  that  E.  V.  d'lnvilliers,  in  his  article 
on  " Estimated  Costs  of  Mining  and  Coking"  (Trans.  A.  I.  M.  E., 
Vol.  XXXV,  1905)  shares  the  same  difficulty  in  arriving  at  true 
costs  for  coal-mining  operations.  He  expresses  himself  as  fol- 
lows: "The  cost  of  coal  delivered  to  an  oven,  and  the  cost  of  the 
manufactured  product,  depends  largely  upon  individual  judgment 
or  practice,  and  on  general  management.  Therefore,  without 
having  access  to  the  accounts  of  a  number  of  individual  mines, 
it  is  not  possible  to  do  more  than  approximate  the  average 
regional  cost  of  mining  coal  or  manufacturing  coke.  .  .  .  For, 
though  each  plant  in  a  district  may  be  mining  upon  the  same 
scale  of  wages,  the  computation  of  net  mining  costs  may  differ 
to  a  considerable  extent  in  two  adjoining  plants,  due  to  different 
methods  of  bookkeeping,  to  a  difference  of  opinion  as  to  what 
items  are  properly  chargeable  to  mining  account  and  to  capital 
account,  or  to  physical  difference  at  the  two  mines." 

Mr.  d'lnvilliers  goes  on  to  estimate  the  real  cost  of  mining 
and  coking  at  Connellsville  and  at  Reynoldsville,  Penn.,  the  first 


70  THE  COST  OF   MINING 

a  slope  mine,  largely  self-draining,  on  a  seam  capable  of  produc- 
ing 9000  gross  tons  (10,000  short  tons)  to  the  acre;  the  second  a 
shaft  mine  where  considerable  pumping  will  be  required  and 
capable  of  producing  7200  gross  tons  (8000  short  tons)  per  acre. 
His  estimate  per  gross  ton  is  as  follows: 

Mining  Coal.  Roy-  Total. 

Cost.  alty. 

Reynoldsville    $0.66         $0.86         $0.04         $0.90 

Connellsville    0.34          0.52          0.08          0.60 

Reducing  this  to  a  short-ton  basis  we  find  that  Mr.  d'Invilliers's 
estimate  of  total  cost  is : 

Reynoldsville 80  cents 

Connellsville 53  cents 

These  figures  are  for  January,  1904.  I  find  that  for  that 
year  the  average  price  of  bituminous  coal  in  Pennsylvania  is 
reported  at  96  cents.  My  arbitrary  estimate  for  cost  of  90  per 
cent,  of  the  price  gives  us  86  cents  for  that  year.  Now,  since  it 
would  seem  that  the  Reynoldsville  mine  represents  conditions 
not  far  from  average  in  the  Pennsylvania  bituminous-coal  regions, 
it  appears  that  the  difference  between  my  estimate  and  Mr. 
d'Invilliers's  estimate  is  not  so  great,  but  that  it  might  all  be 
covered  by  a  difference  of  judgment  between  two  men  in  "what 
is  chargeable  to  operating  account." 

PITTSBURGH  COAL  COMPANY 

The  reports  of  the  Pittsburgh  Coal  Company,  which  operates 
sixty  mines  in  the  neighborhood  of  Pittsburg,  so  situated  that 
they  must  represent  nearly  average  conditions  for  the  Pennsyl- 
vania bituminous  field,  show  the  following:  The  average  number 
of  short  tons  mined  per  acre  is  7000.  Net  profits  for  eight  years 
average  13.8  cents  per  ton.  The  total  cost  for  all  capital  charges 
is  16.2  cents  per  ton.  If  we  assume  that  the  U.  S.  Geological  Sur- 
vey figures  for  the  value  of  coal  at  the  mines  will  hold  good  for 
the  Pittsburgh  Coal  Company,  we  get  the  following,  per  short  ton : 

Average  price  of  coal  for  5  years      $1.03 

Cost  —  Capital  charges       16.2  cents 

Operating  charges  73.0  cents 0.892 

Profit  0.138 

$1.030 


COST  OF  MINING  COAL  71 

Similarly  the  Monongahela  River  Consolidated  Coal  and  Coke 
Company,  also  operating  near  Pittsburg,  with  an  extraction  of 
8000  tons  per  acre,  shows  the  following  for  nine  years: 

Assume  price  of  coal  as  before $1.03 

Cost  —  Capital  charges       0.17  cents 

Operating  charges  0.74  cents 0.91 

Profit 0.12 

$1.03 

CAPITAL  CHARGES 

Without  going  into  further  tables  of  figures  I  find  that  in 
Pennsylvania  the  capital  charges  may  be  calculated  as  follows: 
A  charge  of  5  cents  per  ton  is  made  arbitrarily  to  cover  the  deple- 
tion of  coal  lands.  If  the  property  is  bonded,  this  5  cents  per 
ton  is  put  into  a  sinking  fund  to  retire  the  bonds. 

In  addition,  current  interest  must  be  paid  on  capital  or  bonds. 
This  charge  will  be  in  some  proportion  to  the  amount  of  unmined 
coal  lands  held  for  the  future.  Thus,  if  a  company  has  a  coal 
reserve  for  100  years  on  its  capital  account,  its  interest  charges 
must  be  greater  than  if  its  reserves  are  only  enough  for  20  years. 

It  appears  that  it  requires  approximately  $1  per  ton  of  annual 
product  to  equip  a  coal  mine  for  operation.  Thus,  for  an  out- 
put of  1,000,000  tons  per  year  $1,000,000  will  be  needed  for  plant 
and  equipment.  The  renewal  or  depreciation  of  this  plant  will 
cost  6  per  cent,  per  year. 

In  summary,  then,  we  have: 

For  coal  in  the  ground      ». 5  cents 

For  interest  on  $1  capital 5  cents 

For  depreciation  of  same  capital    6  cents 

Total 16  cents 

It  is  self-evident  that  the  operating  costs  will  vary  more  than 
capital  costs;  probably  about  in  proportion  to  the  total.  Thus, 
if  we  find  at  one  mine  total  costs  of  96  cents,  of  which  16  cents  is 
for  capital  and  80  cents  for  operating,  we  would  probably  find 
that  at  another  mine  where  the  total  cost  is  only  72  cents,  the 
cost  would  be  60  cents  for  operating  and  12  cents  for  capital. 
My  reason  for  believing  this  is  that  a  mine  that  is  cheap  to  work 
must  also  be  cheap  to  open. 

While  I  am  inclined  to  think  that  under  present  or  recent 
conditions,  the  average  cost  of  bituminous  coal  in  Pennsylvania 


72  THE  COST  OF  MINING 

\ 

is  90  cents  or  more,  there  is  reason  to  believe  that  some  of  the 
most  favorable  mines  work  much  cheaper. 

Mr.  Gary,  in  his  recent  testimony  before  the  Ways  and  Means 
Committee  on  tariff  revision,  states  that  the  cost  of  coke  at  the 
ovens,  presumably  at  Connellsville,  chiefly,  was,  in  1906,  $1.75 
per  ton,  on  which  there  was  54  cents  profit.  This  reduces  the 
cost  of  coke  to  $1.21.  If  the  burning  of  the  coke  costs  31  cents, 
we  have  left  90  cents  for  the  coal,  of  which  1J  tons  are  required 
per  ton  of  coke.  This  figures  the  cost  of  coal  at  the  mines  of 
the  U.  S.  Steel  Corporation  down  to  60  cents  per  ton.  Presum- 
ably this  includes  a  sufficient  allowance  for  depreciation.  If  so, 
the  cost  seems  remarkably  low  and  probably  represents  the  cost 
of  bituminous  coal  under  the  most  favorable  conditions  At 
any  rate  it  agrees  pretty  well  with  Mr.  d'Invilliers's  figures  for  a 
representative  Connellsville  mine. 

Certain  other  figures  given  by  Mr.  Gary  about  costs  are  of 
interest.  He  says  that  wages  of  all  classes  at  coal  and  coke  plants 
belonging  to  the  U.  S.  Steel  Corporation  in  1908  averaged  $2.39 
per  day.  Now  at  coal  mines  labor  is  usually  about  75  per  cent, 
of  the  total  expense;  we  may,  therefore,  calculate  that  the  whole 
cost  per  man  per  day  is  about  $3.20.  If  coal  is  mined  for  60 
cents  per  ton  there  must  be  an  output  of  about  5J  tons  for  every 
man.  In  the  State  of  Pennsylvania  at  large,  the  output  is  only 
3.6  tons  per  man.  If  this  output  is  obtained  at  a  total  cost  of 
$3.20,  then  the  cost  per  ton  is  89  cents.'  This  agrees  with  my 
other  figures  for  Pennsylvania. 

Let  us  apply  this  reasoning  to  other  coal  fields  and  see  how 
close  it  brings  us  to  my  estimate  of  cost  at  90  per  cent,  of  the 
selling  price. 

In  Michigan  the  wages  are  undoubtedly  about  the  same  as 
in  Pennsylvania.  I  have  estimated  the  cost  of  Michigan  coal  at 
$1.62  per  ton.  The  output  per  man  per  day  is  $2.11.  If  we 
divide  $3.20  by  this  amount  we  get  $1.52. 

Again,  in  Wyoming  I  am  informed  that  wages  of  coal  miners 
average  about  $3.60  per  day.  If  this  is  75  per  cent,  of  the  whole 
cost  per  man,  that  cost  is  $4.80  per  day.  The  output  per  man 
averaged  in  1907,  3.42  tons;  the  cost  per  ton,  therefore,  should 
be  $1.40.  This  is  exactly  my  estimate  by  the  90-per  cent.  rule. 

I  have  no  information  as  to  the  average  wages  of  coal  miners 
in  Colorado,  but  some  light  can  be  had  on  costs  there  from 


COST  OF  MINING  COAL 


73 


another  source.  The  average  value  of  coal  at  the  mines  in  that  State 
in  1907  is  given  at  $1.40.  My  90-per  cent,  rule  gives  a  cost  of 
$1.26.  The  Colorado  Fuel  and  Iron  Company  mined  that  year 
about  4,500,000  tons  of  coal  at  a  profit  of  $900,000,  or  20  cents  per 
ton.  This  profit  was  not  altogether  on  mining  since  some  of  the 
coal  was  sold  at  a  distance  from  the  mines.  Besides  this  the  profits 
were  diminished  by  certain  fixed  charges,  of  which  the  exact  pro- 
portion belonging  to  the  fuel  department  is  not  clear.  At  any  rate 
it  seems  that  the  net  profits  on  coal  from  mining  were  not  over  10 
cents.  If,  then,  the  U.  S.  Geological  Survey  is  right  in  its  average 
price  of  coal,  the  actual  cost  must  have  been  about  $1.30. 

Following  are  some  more  detailed  figures  on  the  cost  of  opera- 
ting a  slope  mine,  self -draining  in  Virginia.  The  figures  are  com- 
plete in  all  respects  except  that  of  depreciation.  I  am  in  doubt 
whether  that  item  is  fully  taken  care  of,  but  having  no  means  of 
forming  an  individual  opinion,  I  cannot  express  one.  The  seam 
averages  7  ft.  thick: 

COST  SHEET  AT  A  VIRGINIA  COLLIERY 

1905-  1906- 

1906.  1907. 

Per  Ton.  Per  Ton. 

Mining $0.246  $0.251 

Timbering 0.010  0.018 

Ventilation    0.008  0.010 

Removing  refuse  and  deposit      0.005  0.017 

Tracks 0.030  0.031 

Haulage 0.067  0.102 

Dumpage 0.009  0.012 

Blacksmith  shop    0.006  0.007 

Repairs    0.009  0.008 

Supplies 0.007  0.003 

Salaries  —  Plant    0.017  0.019 

Switching    0.005  0.006 

Engineering 0.003  0.005 

Extraordinary  expenses   0.007  0.011 

Adjustment  stables  account 0.005 

Sinking  fund 0.100  0.100 

Attorneys'  fees  and  legal  expenses 0.025  0.016 

General  expense     0.014  0.012 

Salaries  —  General  office    0.040  0.058 

Interest  and  discount    0.073  0  068 

Taxes     0.011  0.011 

Insurance    0.005  0.005 

$0.702  $0.770 


74 


THE  COST   OF  MINING 


Summary: 

Labor $0.382  0.423 

Supplies 0.052  0.077 

Sinking  fund 0.100  0.100 

$0.534  $0.600 

General  expense     0.056  0.070 

Interest,  insurance,  taxes,  attorneys'  fees.  .    0.112  0.100 

$0.702  $0.770 


Tons  mined 240,371    221,552 

It  is  interesting  to  note  the  increased  cost  in  1907  over  1906, 
due  to  the  unhealthy  pre-panic  business  conditions. 

The  following  table  shows  the  estimated  cost  of  coal  mining 
in  various  parts  of  the  Illinois  field,  according  to  Mr.  George  S. 
Rice.  The  only  comment  I  can  make  is  that  the  estimates  for 
depreciation  and  amortization  seem  rather  low. 

ESTIMATE  OF  COST  OF  R.  OF  M.  COAL  IN  ILLINOIS,  AVERAGE  CONDITIONS. 


Northern  111. 

Middle  111. 

Southern  111  . 

150  000  Tons 

250,000  Tons 

250,000  Tons 

Yearly  Output 

Labor 

Sup. 

Labor 

Sup. 

Labor 

Sup. 

Mining  (paid  to  miners  "pick  rate") 

87 



55 

' 

48 

Narrow    work   (entry  driving   and 

passing  through  rolls,  etc.)  

i 

J 

4 

1 

3 

1 

Care  of  mine  (maintenance  of  roads, 

roof  falls   timbering   etc  ) 

15 

51 

71 

31 

6 

2 

Haulage 

8 

2 

5 

1 

4 

1 

Hoisting  and   loading  and  care  of 

mine  top2 

3 

2 

2 

1 

2 

1 

Steam 

1 

2 

1 

1 

1 

1 

Mine  management  

2 

1 

li 

i 

U 

i 

1.165 

.125 

.765 

.065 

.655 

.065 

— 

1.165 

— 

.765 

— 

.655 

Total  mine  cost 

1  29 

83 

72 

[Depreciation   and 

~          ,                   amortization  .... 
General  costs  {,-,„. 
Selling  

— 

5 
2 

I 

3 

2 

I 

2 
2 

Gen'l  management  . 

— 

2 

— 

2 

— 

2 

Grand  total  

— 

1.38 

— 

.90 

— 

.78 

1  Chiefly  timber  and  ties. 

2  These  costs  or  the  subdivision  of  care  of  mine  top  will  run   high  unless 
the  mine  runs  fairly  steady. 


COST  OF  MINING  COAL  75 

COKE  MANUFACTURE  AND  ANTHRACITE  MINING 

The  production  of  commercial  anthracite  is  so  different  a 
problem  from  that  of  mining  bituminous  coal  that  its  cost  is 
nearly  parallel  to  that  of  coke.  Run-of-mine  anthracite  is  worth- 
less for  fuel.  It  will  not  burn  unless  it  is  carefully  sized.  It 
will  not  burn  if  there  is  even  a  moderate  mixture  of  slate  or 
bone  in  it.  The  sizing  and  rejection  of  impurities  necessitates 
careful  crushing,  sizing  and  washing.  It  is  distinctly  a  process 
of  concentration  as  well  as  of  sizing,  for  the  loss  in  the  "  break- 
ers" will  average  fully  one-third  of  the  run-of-mine  tonnage. 
The  cost  of  concentrating,  or  operating  the  breakers,  is  from  30 
to  50  cents  per  ton  shipped  —  not  cheap  milling  by  any  means, 
and  no  doubt  mining  men  not  acquainted  with  the  fact  will  be 
surprised  at  it.  The  comparison  may  be  tabulated  as  follows : 

Coke.  Anthracite. 

Tons  run-of-mine  per  ton     ....  H  H 

Cost  of  manufacture  per  ton  .  .  30  cents  to  60  cents  30  cents  to  50  cents 

Several  instances  of  actual  figures  for  coke  have  come  to  my 
attention.  Mr.  d'Invilliers  calculated  average  results  at  two 
Pennsylvania  points  for  five  years  ending  1903  as  follows: 

CONNELLSVILLE    REGION    PLANT    OF   500    OVENS 

Coal,  l\  tons,  at  56  cents  net  ton     $0.840 

Charging,  leveling,  drawing  and  labor 0.326 

Salaries,  supplies  and  depreciation 0.050 

Total    SL216 

It  will  be  noted  that  I  deduce  from  Mr.  Gary's  evidence  that 
the  actual  cost  of  coke  in  Connellsville  to  the  steel  company  in 
1906  was  $1.21. 

REYNOLDSVILLE  PLANT  OF  500  OVENS 

Coal,  1.7  tons,  at  70  cents    $1.19 

Charging,  leveling,  drawing  and  labor 0.40 

Salaries,  supplies  and  depreciation     •    0-05 

$1.64 

In  neither  of  these  cases  have  I  used  any  table  exactly  as 
given  by  Mr.  d'Invilliers.  He  does  not  give  the  details  of  his 
estimates  for  a  five-year  average,  and  I  have  endeavored  to 


76  THE  COST  OF  MINING 

supply  them.  There  seems  to  be  some  mistake  in  his  average  of 
Reynoldsville  costs,  for  they  do  not  work  out  in  proportion  as 
he  gives  them. 

Another  example  of  coke  costs  more  in  detail  is  from  a  200- 
oven  hand-operated  plant  in  Virginia  —  in  1906: 

Cost  of  coal,  70.2  cents  per  ton     1.027 

Coal  used  in  making  coke .  1.027 

Crushing    , 0.023 

Charging   0.033 

Leveling  and  sealing 0.028 

Drawing 0.210 

Loading     0.134 

Switching    0.023 

Salaries  at  plant 0.033 

Tracks 0.008 

Repairs    0.021 

Supplies 0.012 

Extraordinary  expense 0.006 

Insurance    0.001 

Total 1.561 

In  summary: 

Raw  material 1.027 

Labor 0.459 

Supplies 0.075 

1.561 

The  following  year,  1907,  the  costs  at  the  same  plant  were  as 
follows : 

Raw  material $1 .227 

Labor 0.524 

Supplies 0.114 

Total    $1.865 

ANTHRACITE  MINING 

The  extraction  of  run-of-mine  anthracite  is  rather  more 
expensive  than  that  of  bituminous  coal,  chiefly  because  the  anthra- 
cite seams  are  very  much  more  folded.  It  is  necessary  to  do 
vastly  more  development  work  in  rock,  and  necessary  also  to 
use  more  timber  in  supporting  gangways  than  is  the  case  in  flat 
seams.  Moreover,  the  constantly  changing  dip  prevents  the 
use  of  uniform  methods  throughout  the  mines.  On  the  other 
hand,  the  coal  often  occurs  in  magnificent  thick  seams.  The 


COST  OF   MINING   COAL  77 

actual  difference  in  cost  for  run-of-mine  I  do  not  estimate  at 
more  than  10  cents  per  ton,  92  cents  for  bituminous  and  $1.02 
for  anthracite  (per  short  ton,  the  long  ton  is  used  at  the 
mines) . 

Below  will  be  found  consecutive  statements  of  the  costs  of 
the  Philadelphia  &  Reading  Coal  and  Iron  Company  for  a  period 
of  years.  These  tables  in  the  main  explain  themselves,  but  it 
is  worth  while  to  make  the  following  comments:  The  actual  cost 
of  mining  and  repairs  will  be  seen  to  average  about  $1.80  per 
long  ton,  equivalent  to  about  $1.60  per  short  ton.  This  is  for 
current  operating  only,  but  it  includes  the  cost  of  putting  the 
coal  through  the  breakers,  and  it  is  a  cost  based  on  the  finished 
product  which  may  be  calculated  to  be  only  two-thirds  the  run- 
of-mine  product.  Details  for  cost  of  breaking  are  not  given,  but 
from  inquiries  made  in  the  region,  it  seems  that  40  cents  per  ton 
is  an  average.  Deducting  this  sum  we  get  $1.20  for  mining 
alone,  and  this  is  for  mining  1^  tons  of  run-of-mine  coal.  The 
actual  cost,  then,  per  ton  of  run-of-mine  to  this  company  seems 
to  be  some  80  cents  per  short  ton. 

The  capital  and  general  charges  that  follow  in  the  statements 
largely  explain  themselves.  The  only  item  to  which  I  wish  to 
draw  special  attention  is  that  of  improvements,  which  is  regularly 
charged  in  as  an  operating  cost.  This  is  entirely  as  it  should  be, 
and  the  charge  is  doubtless  based  on  the  theory  that  the  annual 
improvements  to  plant  are  sufficient  to  cover  the  renewal  of  equip- 
ment. The  company  has  charged  to  improvements  and  equip- 
ments at  collieries  $13,092,635.  This  is  equivalent  to  about  $1.30 
per  ton  on  .its  annual  output.  Some  companies  would  have 
charged  a  much  larger  amount  to  this  item.  The  amount  has 
not  been  increased  in  recent  years  in  spite  of  the  fact  that  since 
1902  the  output  has  increased  50  per  cent.  It  is  usual  to  charge 
off  for  depreciation  at  coal  mines  6  per  cent,  of  the  capital  em- 
ployed in  the  plant  and  equipment.  In  the  case  of  the  Reading 
company  such  a  sum  would  have  been  sufficient  in  1902,  but 
would  fall  far  short  of  the  charges  made  in  1908.  As  costs  are 
usually  calculated,  therefore,  it  would  seem  that  this  company  is 
writing  off  somewhat  more  for  depreciation  than  is  strictly  neces- 
sary. It  would  be  obviously  logical  for  the  company  to  hold  on 
its  balance  sheet  a  greater  capital  for  an  output  of  10,000,000  tons 
per  year  than  for  an  output  of  only  7,000,000  tons. 


78 


THE  COST   OF   MINING 


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COST  OF  MINING  COAL  79 

In  other  words,  I  wish  to  express  my  conviction  that  the  costs 
given  by  the  Philadelphia  &  Reading  company  for  anthracite 
mining  are  adequate  in  all  respects,  and  that,  therefore,  the 
accompanying  statement  gives  an  excellent  idea  of  the  real  cost 
of  anthracite  mining. 

The  following  is  an  interesting  chart  by  Mr.  H.  M.  Chance, 
showing  the  relation  of  cost  of  anthracite  mining  to  the  thickness 
of  the  seam.  Mr.  Chance  points  out  that  the  most  important 
factor  in  the  variation  of  coal-mining  cost  is  the  thickness  of  the 
seam,  and  nothing  will  show  the  facts  in  the  case  more  plainly 
than  the  chart  which  I  take  from  Mr.  Chance's  communication 
to  the  Engineering  and  Mining  Journal  of  July  29;  1909. 


80 


THE  COST  OF  MINING 


Curves  showing  Cost  of  Mining  Anthracite  Coal,  as 
affected  by  thickness  of  the  coal  worked,  by  H.M.  Chance. 


20 


18 


6*     6"     G"     6"     6" 
14  12  10       987654321 

Thickness  of  Coal  in  Feet 


Upper  Curve  shows  Costs  under  Unfavorable  Mining  Conditions 
Lower  Curve      ".         "          "       Favorable  "  " 

FlG.  3 

PUBLIC  POLICY  IN  COAL  MINING 

It  has  often  been  pointed  out  that  coal  in  the  earth  is  a  natural 
resource,  the  use  of  which  is  important  not  only  to  the  owners 
of  the  coal  lands,  but  to  the  nation  at  large,  and  that  since  the 
supply  of  coal  is  limited  by  nature,  wisdom  demands  that  it 


COST  OF  MINING  COAL  81 

should  be  wisely  handled.  This  is  a  fact  that  has  been  recognized 
by  many  governments  from  the  earliest  times,  and  the  policy  of 
treating  mining  rights  as  public  rather  than  as  private  property 
has  been  adopted  by  probably  the  greater  number  of  nations. 
These  ideas  have  been  so  widely  discussed  that  they  are  already 
known  to  the  majority  of  people,  and  I  wish  to  call  attention 
only  to  some  considerations  that  may  have  a  practical  value. 

CAUSES  OF  WASTE  IN  COAL  MINING 

An  interesting  paper  1  contributed  by  Mr.  George  S.  Rice  to 
the  transactions  of  the  American  Institute  of  Mining  Engineers 
at  the  Chattanooga  meeting,  October,  1908,  calls  attention  to 
the  fact  that  the  percentage  of  yield  in  Illinois  from  the  coal 
seams  is  only  from  50  per  cent,  to  95  per  cent.,  and  that  the 
losses  are  from  5  per  cent,  to  50  per  cent,  of  the  available  coal. 
It  would  be  interesting  if  space  permitted  to  quote  Mr.  Rice's 
article  in  full,  but  since  that  is  not  feasible  I  shall  call  attention 
to  some  of  the  principal  conclusions  developed. 

Mr.  Rice  summarizes  the  causes  of  mining  waste  as  follows  : 

(1)  Cheapness  of  coal  "in  place'';  that  is,  in  the  seam. 

(2)  Low  market  prices  resulting  from  extreme  competition. 

(3)  Character  of  the  seam,  roof,  and  floor  as  determining 
the  method  of  mining. 

(4)  Surface  subsidence  due  to  mining. 

(5)  Interlaced  boundary  ownerships. 

(6)  Carelessness  in  mining  operations. 

Mr.  Rice  says :  "  The  first  two  factors  taken  together  are  the 
controlling  ones  in  most  mining  operations,  in  influencing  the 
choice  of  a  mining  system." 

This  statement  is  so  true  that  too  much  emphasis  cannot 
be  laid  upon  it.  It  has  been  pointed  out  in  Chapter  II  that 
economy  may  demand  the  sacrifice  of  considerable  portions  of 
low-priced  mineral  products  in  order  to  secure  a  sufficiently  low 
mining  cost;  and  it  will  be  pointed  out  in  various  places  in  suc- 
ceeding chapters  that  the  value  of  the  material  mined  is  always 
one  of  the  greatest  factors  in  the  cost  of  mining.  So  pre-eminent 
is  this  factor  that  it  is  almost  possible  to  say  that  it  is  the  only 
one  of  real  consequence  in  determining  percentage  of  waste; 

1  Mining  Wastes  and  Mining  Costs  in  Illinois. 


82  THE  COST  OF  MINING 

for  it  is  self-evident  that  were  the  product  sufficiently  valuable, 
a  system  or  method  would  be  found  to  prevent  the  loss  of  it. 
The  prevention  of  losses,  therefore,  as  a  matter  of  public  policy, 
is  simply  a  question  of  dollars  and  cents.  If  the  public  wishes 
the  coal  to  be  mined  cleaner,  it  must  be  willing  to  pay  a  sufficient 
price  to  make  clean  mining  profitable  to  the  operator. 

It  is  also  self-evident  that  common  sense  must  be  invoked 
to  place  a  limit  on  efforts  to  secure  this  kind  of  economy.  A 
reference  to  Mr.  Chance's  chart  discloses  at  a  glance  that,  as  the 
thickness  of  the  coal  seam  diminishes,  the  cost  increases  with- 
out limit  —  in  mathematical  language,  approaches  infinity.  It 
is  preposterous,  therefore,  to  attempt  to  save  all  coal,  because  a 
seam  one  inch  thick  would  cost  $50  a  ton;  a  seam  two  inches 
thick  would  cost  $25  a  ton;  in  each  case  at  the  mine.  Such  costs 
would  preclude  the  possibility  of  using  coal  for  anything  like  the 
ordinary  purposes.  Efforts  toward  the  prevention  of  waste, 
therefore,  must  be  confined  strictly  within  limits  that  can  easily 
be  agreed  upon  as  reasonable  for  any  given  district.  For  instance, 
in  Illinois  it  might  be  agreed  that  coal  seams  down  to  a  thick- 
ness of  two  feet  should  be  worked.  Such  a  decision  might  have 
far-reaching  consequences  in  the  conduct  of  the  coal-mining 
business.  For  instance,  suppose  an  operator  had  one  seam  6  ft. 
thick  and  another  seam  2  ft.  thick.  It  we  imagine  that  (1)  a 
price  is  fixed  that  would  allow  the  mining  of  a  2-ft.  seam  without 
loss  and  at  the  same  time  without  profit,  and  (2)  that  the  law 
requires  the  operator  to  mine  his  2-ft.  seam  or  else  lose  the  right 
to  mine  the  6-ft.  seam,  it  is  evident  that  the  operator  would  be 
willing  to  mine  the  coal  according  to  all  requirements;  because 
the  6-ft.  seam  would  be  so  profitable  that  the  mining  of  the  2-ft. 
seam  without  profit  would  not  be  a  serious  inconvenience.  If, 
however,  it  were  a  question  of  mining  a  2-ft.  seam  without  profit, 
in  connection  with  a  3-ft.  seam  with  a  very  small  profit,  the 
operator  would  probably  feel  that  the  returns  of  the  enterprise 
would  be  too  small  and  he  would  not  undertake  it. 

The  question  of  effective  economy  in  coal  mining  as  regards 
waste,  therefore,  is  a  question  precisely  like  the  productive  tariff 
so  far  as  its  effect  on  the  public  at  large  is  concerned.  In  the 
case  of  the  tariff,  however,  the  public  is  found  to  subject  itself 
readily  to  loss  because  it  is  quite  possible  to  make  the  majority 
of  the  voters  beneficiaries  of  the  tariff.  If  this  is  not  actually 


COST  OF  MINING  COAL  83 

the  case  a  majority  think  themselves  benefited,  believing  that  it 
is  of  more  consequence  to  them  to  get  a  higher  price  for  the  prod- 
ucts they  have  to  sell  than  to  pay  a  higher  price  for  the  products 
they  have  to  buy. 

In  the  case  of  a  proposal  to  raise  the  price  of  coal  in  order  to 
prevent  waste,  it  is  not  at  all  evident  how  the  public  could  be 
imposed  upon  by  such  considerations.  Granted  that  the  coal 
miners  would  find  such  a  policy  an  unqualified  benefit,  it  is  not 
clear  how  the  public  at  large  could  be  induced  to  pay  a  higher 
price  for  one  of  its  chief  necessities  for  no  object  except  an  altru- 
istic regard  for  future  generations. 

It  seems  as  if  the  only  rational  way  to  prevent  wastes  and 
at  the  same  time  to  secure  better  operation  all  around,  with  a 
saving  of  human  life  as  well  as  of  coal,  is  to  permit  a  carefully 
guarded  monopoly  in  each  field  of  the  business  of  coal  mining. 
Monopoly  is  a  disagreeable  word,  but  it  is  the  only  one  that  con- 
veys the  meaning  in  plain  English.  It  would  have  to  take  the 
form  either  of  a  consolidation  of  ownership  or  of  a  pooling  of 
interests  under-  government  supervision.  My  own  conviction 
is  that  the  interests  both  of  the  public  at  large  and  of  the  coal- 
mining business  itself  demand  such  an  arrangement. 

The  business  in  the  United  States  is  suffering  wofully  from 
over-competition.  A  vast  amount  of  capital  is  invested  in  coal 
mines  that  is  put  in  extreme  jeopardy  through  the  failure  to 
secure  a  reasonable  price. 

It  is  just  as  disastrous  from  an  economic  standpoint  for  the 
coal  business  to  be  over-developed  as  to  be  under-developed. 
The  under-development  of  coal  mines  means,  of  course,  high 
prices  through  failure  of  the  supply  and  consequent  loss  to  the 
public.  Over-development,  on  the  other  hand,  means  a  loss, 
through  a  part  of  the  public's  money  being  tied  up  in  useless 
enterprises. 

It  does  not  seem  unreasonable  to  hope  that  in  each  mining 
district  the  government  might  fix  a  price  for  the  sale  of  coal, 
simply  on  the  basis  of  an  actual  cost  of  mining  down  to  a  certain 
thickness.  Such  a  regulation  of  the  coal-mining  business  would 
not  be  inherently  different  from  the  regulation  of  freight  rates 
by  the  Interstate  Commerce  Commission.  If  such  an  arrange- 
ment were  made  all  that  the  government  or  state  inspectors 
would  need  to  do  would  be  to  look  out  for  the  clean  mining  of 


84  THE  COST  OF  MINING 

the  thinnest  seams;  the  thick  ones  would  be  well  taken  care  of 
without  urging. 

NEW  CAPITAL  REQUIRED  IN  COAL  MINING  OPERATIONS 

A  glance  at  the  figures  in  Chapter  IV  reveals  the  fact  that 
in  the  ten  years  between  1897  and  1907  the  production  of  coal 
rose  from  200  million  tons  to  480  millions,  equal  to  an  average 
increase  of  28  million  tons  a  year.  Without  going  into  details  we 
may  assume  that  the  equipment  of  the  mines  for  this  production 
must  cost,  on  an  average,  at  least  $1.25  per  annual  ton.  Under 
the  most  favorable  conditions  the  cost  of  equipment  and  develop- 
ment is  $1  per  annual  ton  for  flat  bituminous  coal  seams;  for  the 
more  difficult  forms  of  mining,  such  as  anthracite,  the  cost  per 
annual  ton  is  at  least  $2.50,  and  for  coke  production  as  much  or 
more.  The  average  amount  of  new  capital  going  into  the  coal 
business,  therefore,  is  at  least  $35,000,000  a  year  and  $40,000,000 
is  a  more  probable  figure.  This  is  an  exceedingly  important 
fact  to  bear  in  mind  in  considering  any  possible  consolidations 
in  this  business. 


CHAPTER   VI 
COST   OF   MINING   LAKE   SUPERIOR   IRON 

Importance  of  the  district  —  General  statement  of  the  cost  problem  —  The 
United  States  Steel  Corporation  —  Capital  employed  in  mining,  trans- 
portation, and  blast  furnaces  —  Working  capital  —  Treatment  of  capital 
charges  —  Iron  mines  and  royalties  —  Cost  of  mining  —  Old  ranges  and 
the  Mesabi  range  —  Cost  of  open-pit  operations  —  Engineering  and 
management  —  Taxes  —  Economy  of  consolidation  —  Estimate  of  aver- 
age mining  cost  —  Transportation  —  Estimates  of  selling  cost  of  pig 
iron  at  Pittsburg  —  Statistical  record  of  United  States  Steel  Corpora- 
tion —  Its  capital  charges  and  increased  capacity  —  Its  profits  —  Its 
plants  and  property. 

THE  iron  ores  of  the  Lake  Superior  region  are  the  richest  in 
the  world,  and  it  is  probable  that  the  400,000,000  tons  shipped 
up  to  the  present  time  have  averaged  in  metallic  iron  60  per 
cent,  of  dry  ore.  Some  cargoes  have  run  as  high  as  68.5  per 
cent.  When  you  remember  that  these  ores  are  hematite  and 
that  pure  hematite  is  only  70  per  cent,  iron,  you  realize  that  they 
are  exceptionally  pure  natural  concentrates,  indeed  purer  than 
most  artificial  concentrates. 

When  people  speak  of  the  output  of  metal  mines  in  general 
they  mean  the  gross  selling  value  of  the  refined  metals  of  New 
York.  Now  the  value  of  Lake  Superior  iron  ores  is  never  given 
in  mass.  You  hear  of  the  value  of  bessemer,  or  non-bessemer, 
old  range  or  Mesabi  ores  at  the  mines  or  at  Cleveland,  but  you 
do  not  hear  of  average  values  nor  of  gross  values  in  pig  iron. 

OUTPUT  OF  VARIOUS  MINING  DISTRICTS 

To  get  a  sense  of  proportion  let  us  calculate  the  metal-selling 
value  at  New  York  of  the  annual  output  of  some  of  the  greatest 
mining  districts  for  an  average  of  five  years:  Cripple  Creek,  gold, 
$12,000,000;  Transvaal,  gold,  $94,860,000;  Butte,  copper,  silver, 
and  gold,  $48,000,000;  Cceur  d'Alene,  lead-silver,  $13,000,000; 

85 


86  THE  COST  OF  MINING 

Joplin,    zinc   and   lead,    $16,300,000;    Lake   Superior,    pig  iron, 
$290,000,000. 

The  business  is  profitable,  one  of  the  most  profitable  in  the 
world,  but  it  is  not  easy  to  give  precise  figures  concerning  it. 
Much  has  been  written  on  the  various  problems  involved,  such 
as  the  caving  system  of  mining,  the  systems  of  accounting,  min- 
ing in  open  pits,  blast-furnace  practice,  etc.,  but  each  of  these  is 
only  a  link  in  the  chain.  I  have  never  found  any  comprehensive 
discussion  of  the  subject  as  a  whole.  I  have,  therefore,  endeav- 
ored to  work  out  on  an  original  basis  a  statement  of  the  cost  of 
operating  this  vast  business.  It  may  be  interesting  to  explain 
the  method. 

GENERAL  STATEMENT 

The  first  thing  to  decide  is  what  to  include  in  the  cost.  At 
present,  it  is  not  a  matter  of  any  particular  interest  to  have 
details  of  the  mere  cost  of  extracting  ore  from  some  particular 
iron  mine  and  dumping  it  on  the  surface,  although  before  the 
absorption  of  most  of  the  mines  by  the  various  steel  and  furnace 
corporations  the  local  mining  costs  were  indeed  a  subject  of 
interest.  There  were  then  many  companies  which  only  mined 
the  ore  and  sold  it  at  the  pit  mouth. 

At  the  present  time  by  far  the  greater  part  of  the  ore  is  mined 
by  concerns  which  use  it  to  make  pig  iron  and,  in  many  cases, 
finished  manufactured  steel  or  iron  products.  To  describe  this 
industry  in  parallel  terms  to  those  used  in  the  case  of  other  metals 
it  seems  to  me  that  we  should  find  the  cost  of  pig  iron  delivered  at 
New  York.  It  is  quite  true  that  New  York  is  not  the  greatest 
market  for  pig  iron,  but  since  I  have  discussed  other  metals  on 
the  theory  of  their  delivery  there  it  is  reasonable  to  follow  the 
same  plan  with  iron. 

The  reason  for  stopping  with  the  production  of  pig  iron  is 

NOTE.  —  In  this  chapter  I  have  assumed  in  regard  to  the  United  States 
Steel  Corporation  that  the  profits  on  ore  hauled  by  others  will  be  counter- 
balanced by  profits  earned  by  the  corporation  on  ore  hauled  for  others,  so 
that  the  final  result  with  regard  to  this  transportation  will  be  the  same  as  if 
all  the  ore  mined  by  this  company  were  transported  by  the  company.  I  have 
also  assumed  that  the  making  of  pig  iron  at  Pittsburg  is  representative  in 
cost,  and  that  pig  iron  can  be  made  at  Pittsburg  and  sold  at  New  York  for  as 
low  a  price  as  pig  iron  made  at  other  points  and  shipped  to  New  York.  All 
tons  are  of  2240  pounds. 


COST  OF  MINING   LAKE  SUPERIOR  IRON  87 

simply  the  analogy  of  other  metals.  Pig  iron  is  the  basic  com- 
modity of  iron  manufacture.  It  bears  the  same  relation  to  the 
making  of  steel  rails  or  pocket  knives  as  electrolytic-copper  bars 
bear  to  the  making  of  copper  wire  or  brass  door  knobs,  or  as 
pig  lead  bears  to  lead  pipe  or  buck-shot.  As  I  shall  try  to  show 
what  it  costs  to  produce  from  various  districts  copper,  lead,  and 
zinc  ready  for  manufactures,  so  I  shall  try  to  show  the  cost  of 
bringing  Lake  Superior  iron  to  the  same  stage. 

COMPLEXITIES  OF  THE  PROBLEM 

When  we  give  this  problem  some  attention  we  soon  find  it 
rather  complex.  The  ore  comes  from  scores  of  different  mines, 
each  producing  its  own  particular  grade  at  its  own  particular 
cost.  But  the  cost  of  getting  ore  out  of  the  mine  is  considerably 
less  than  that  of  transporting  the  ore  from  the  mines  to  the  fur- 
naces, although  the  cost  of  transportation  varies  considerably 
according  to  the  situation  of  the  mine.  We  find  that  in  some 
cases  large  royalties  are  paid  to  fee  owners  and  in  other  cases 
the  mining  company  owns  the  ground.  These  various  factors 
are  bewildering.  Furthermore  none  of  the  companies  gives  its 
costs. 

The  United  States  Steel  Corporation,  however,  issues  very 
good  reports.  These  and  various  isolated  data  published  by 
the  U.  S.  Geological  Survey,  and  such  information  as  I  could  get 
from  personal  observation,  are  the  sources  from  which  my  corn- 
elusions  are  derived.  The  Steel  Corporation  is  fully  as  much  a 
manufacturing  as  a  mining  concern  and  even  buys  some  of  its 
pig  iron  from  others.  It  does  not  stop  with  pig  iron.  It  makes 
steel  rails,  sheets,  wire,  rods,  and  even  spelter  and  cement.  It 
is  the  greatest  of  all  industrial  enterprises,  employing  in  good 
times  more  than  200,000  men.  Naturally  the  reports  of  such  a 
corporation  must  be  condensed.  As  a  matter  of  fact  no  opera- 
ting data  of  any  kind  are  given.  The  omission  is  in  this  case 
quite  proper.  The  production,  the  earnings,  the  capital  expend- 
itures, the  property  holdings,  are  all  given.  This  information 
seems  at  first  insufficient  for  any  definite  statement  of  costs,  but 
it  is  all  that  can  be  had.  On  two  recent  trips  to  the  Mesabi 
range,  I  saw  a  good  deal  of  the  mines,  but  I  enjoyed  no  confi- 
dences. My  inquiries  were  such  as  any  one  could  easily  make. 
I  make  this  explanation  in  order  that  no  one  may  be  under  a 


88  THE  COST  OF  MINING 

misapprehension.     The  basis  for  the  statements  I  am  about  to 
make  is  what  I  believe  to  be  common  sense. 

ACTIVITIES  OF  THE  UNITED  STATES  STEEL  CORPORATION 

The  operations  of  the  Steel  Corporation  are  undoubtedly 
representative  of  the  Lake  Superior  iron  business  —  far  more 
so  than  those  of  any  other  concern.  It  mines  and  ships  55  per 
cent,  of  the  whole  product.  It  owns  two  of  the  three  ore  rail- 
roads in  Minnesota  and  the  shipments  over  its  roads  are  52  per 
cent,  of  the  whole  Lake  Superior  output.  Just  what  proportion 
of  the  ore  is  transported  on  the  lakes  by  the  company's  boats  I 
do  not  know.  When  we  come  to  pig  iron  we  find  that  the  com- 
pany produces  an  amount  equivalent  to  55  per  cent,  of  the  prob- 
able content  of  Lake  ores.  It  seems  to  have  about  75  per  cent, 
of  the  known  ore  reserves  of  the  region.  We  may  conclude, 
therefore,  that  this  company  performs  about  55  per  cent,  of  the 
business  all  along  the  line,  and  that  its  costs  would  be  approx- 
imately the  same  if  it  did  all  the  business. 

One  might  argue  that  the  costs  of  the  Steel  Corporation  are 
radically  different  in  some  respects  from  those  of  the  independ- 
ents. For  instance,  an  independent  may  have  to  pay  80  cents  a 
ton  for  freight  that  costs  the  Steel  Corporation  only  40  cents. 
It  is  for  this  very  reason  that  the  Steel  Corporation  is  most  repre- 
sentative. Its  business  is  complete;  that  of  the  others,  frag- 
mentary. Just  as  the  independents  expect  a  profit  on  the  ore 
that  they  own,  so  they  must  expect  to  pay  a  profit  on  the  trans- 
portation that  they  do  not  own.  It  would  be  next  to  impossible 
to  work  out  the  real  cost  of  pig  iron  if  we  tried  to  discover  and 
weave  together  the  obscure  and  disjointed  costs  and  profits  of  a 
chain  of  discordant  operators. 

CAPITAL  EMPLOYED  AT  IRON  MINES 

For  the  purpose  of  this  article  the  capital  employed  is  one  of 
the  most  vital  elements  to  consider.  Remembering  that  we  are 
to  obtain  our  costs  on  pig  iron  and  not  on  finished  products,  we 
must  segregate  the  capital  used  in  manufacturing  from  that 
used  in  mining  and  smelting.  This  can  be  done  only  approxi- 
mately. Probably  no  one  could  make  the  division  with  abso- 
lute certainty,  for  it  is  necessary  to  remember  that  transporta- 
tion, fuel,  and  power  facilities  owned  by  the  company  are  used 


COST  OF  MINING  LAKE  SUPERIOR   IRON  89 

for  the  joint  purpose  of  manufacturing  steel  products  and  of 
producing  pig  iron.  I  am,  therefore,  compelled  to  make  a  division 
on  my  own  judgment,  and  in  order  to  enable  the  reader  to  esti- 
mate the  legitimacy  of  this  judgment,  it  is  necessary  to  show 
the  method  of  arriving  at  it. 

The  corporation  owns  in  the  Lake  Superior  region  72  iron 
mines  of  which  10  are  on  the  Marquette  range,  10  on  the  Men- 
ominee,  6  on  the  Gogebic,  6  on  the  Vermilion,  and  40  on  the 
Mesabi  range.  Neglecting  the  purchase  price  of  the  properties, 
and  considering  only  the  actual  money  invested  in  the  plants 
for  the  machinery,  developments,  etc.,  I  make  a  rough  guess 
that  the  total  capital  employed  would  be  somewhat  as  follows: 

Old  ranges,  each  $2,500,000  .  .  .' $10,000,000 

Mesabi  range 25,000,000 

Invested  in  extensive  exploration  and  developments  in  the  whole 

Lake  Superior  region 15,000,000 


Total  investment  $50,000,000 

CAPITAL  EMPLOYED  IN  TRANSPORTATION 

The  Duluth  &  Iron  Range  railroad  and  the  Duluth,  Missabe 
&  Northern  railroad  with  a  total  of  363  miles  of  main  line  would 
be  indispensable  to  the  conduct  of  this  business,  even  if  it  did 
not  extend  beyond  the  production  of  pig  iron.  We  may  calcu- 
late the  value  of  this  property  at  $50,000  to  the  mile,  or  in  round 
numbers  18,000,000.  The  Elgin,  Joliet  &  Eastern  railroad  and 
various  small  lines  near  the  manufacturing  plants,  with  a  total 
length  of  about  295  miles,  may  be  estimated  to  belong  half  to 
the  production  of  pig  iron  and  half  to  manufacturing.  I  would 
charge,  therefore,  $7,000,000  in  round  numbers  for  these  lines. 
The  Bessemer  &  Lake  Erie  railroad,  with  205  miles  of  lines,  I 
would  charge  entirely  to  the  production  of  pig  iron,  and  capital- 
ize it  at  $10,000,000.  This  figures  up  a  total  of  $35,000,000  for 
railroad  tracks.  In  addition  to  this  we  have  the  railroad  equip- 
ment which  I  estimate  at  $52,500,000,  out  of  which  $40,000,000 
would  be  necessary  for  the  production  of  pig  iron  alone. 
We  have  then  a  total  for  railroads  and  their  equipment  of 
$75,000,000. 

The  marine  equipment  consists  of  76  steamers  and  29  barges. 
Many  of  these  steamers  are  the  largest  and  best  upon  the  lakes, 


90  THE  COST  OF  MINING 

and  some  of  them  undoubtedly  cost  $700,000  or  $800,000  each. 
I  should  say  that  the  total  equipment  must  be  worth  $40,000,000. 

CAPITAL  EMPLOYED  IN  COAL  AND  COKE  PROPERTIES 

We  have  in  the  Connellsville  and  neighboring  regions  62,253 
acres  of  coal  lands  and  20,471  coke  ovens.  I  believe  it  would 
be  conservative  to  estimate  the  capital  employed  there  at 
$30,000,000.  In  the  Pocahontas  district  there  is  a  lease  on 
65,947  acres  on  which  are  2151  coke  ovens.  This  property 
must  have  cost  somewhere  in  the  neighborhood  of  $10,000,000 
for  its  development. 

There  are  in  addition  31,928  acres  of  steam-coal  ground  in 
Pennsylvania,  West  Virginia,  and  Ohio.  I  would  estimate  the 
valuation  of  the  plants  employed  on  these  properties  to  be  at 
least  $5,000,000.  We  have  then  a  total  of  $45,000,000  for  coal 
and  coke  plants.  Of  this  I  should  say  $35,000,000  would  be 
necessary  for  the  conduct  of  the  pig-iron  business  of  the  cor- 
poration. 

CAPITAL  IN  BLAST  FURNACES 

The  corporation  owns,  exclusive  of  its  properties  in  the  South, 
100  blast  furnaces,  many  of  them  the  largest  and  best  in  the 
world.  This  property  may  be  estimated  at  $110,000,000. 

For  the  handling  and  shipping  of  iron  ore,  coke,  and  coal, 
the  corporation  owns  a  large  number  of  extensive  docks,  the 
total  value  of  which  I  would  guess  at  $20,000,000. 

CAPITAL  IN  INVENTORY  AND  SURPLUS 

At  the  end  of  1908,  the  inventory  of  the  Steel  Company  was 
given  at  $143,000,000,  of  which  nearly  $66,000,000  was  in  ore. 
It  seems  to  be  a  fair  deduction  from  this,  if  its  business  were  only 
making  pig  iron  one-half  the  grand  total  would  be  necessary  — 
say  $70,000,000.  At  the  same  time  the  surplus  was  given  at 
$133,000,000,  of  which,  however,  $78,000,000  had  been  invested 
on  plant  account,  leaving  a  cash  balance  of  something  over 
$50,000,000.  We  may  assume  that,  inasmuch  as  the  selling 
price  of  pig  iron  is  about  one-half  of  that  of  the  finished  products, 
—  one-half  of  this  cash  surplus  would  be  required  in  the  busi- 
ness of  making  pig  iron  —  say  $25,000,000,  making  a  total  work- 
ing capital  of  $95,000,000. 


COST  OF  MINING  LAKE  SUPERIOR  IRON                  91 

SUMMARY  OF  CAPITAL  USED 
We  may  summarize  the  capital  as  follows: 

Iron  mine  plants  and  development $50,000,000 

Plants  for  transportation  of  iron  ore    115,000,000 

Coal,  coke,  and  quarry  plants 35,000,000 

Docks  and  dock  equipment 20,000,000 

Blast  furnaces 110,000,000 


Total  fixed  capital  $330,000,000 

Working  capital  in  inventory  and  surplus 95,000,000 

Total  capital $425,000,000 

It  is  to  be  noted  that  this  estimate  does  not  include  the  pur- 
chase price  of  lands  or  good-will,  but  only  such  capital  as  would 
be  required  if  the  opportunity  to  conduct  this  business  were  a 
free  gift.  Capital  so  employed  is  worth  in  round  numbers  5  per 
cent,  interest  plus  a  sinking  fund,  calculated  to  retire  the  prin- 
cipal in  about  forty  years.  Such  a  fund  is  equal  to  about  1  per 
cent,  additional.  We  must  calculate  the  use  of  this  capital  then 
at  6  per  cent.,  and  this  is  not  profit.  It  is  merely  the  actual 
value  of  the  money  employed  —  such  a  return  as  can  be  secured 
by  an  investor  without  burdening  himself  with  the  management 
of  an  enterprise.  In  the  case  of  the  Steel  Corporation  by  far 
the  greater  portion  of  this  capital  is  actually  represented  by*  5 
per  cent,  bonds  to  be  retired  by  a  sinking  fund  substantially  on 
the  terms  indicated  above.  We  must  therefore  include  as  an 
operating  cost  of  this  business  an  annual  instalment  of  6  per 
cent,  on  $330,000,000  equal  to  $19,800,000.  On  an  output  of 
10,000  tons  of  pig  iron  a  year  this  is  $1.98  a  ton. 

In  addition  to  this  we  must  \nake  a  charge  for  depreciation 
which  is  usually  represented  by  new  construction.  It  is  generally 
believed  that  depreciation  on  the  kind  of  property  in  question 
will  amount  to  some  6  per  cent,  per  annum.  But  in  this  case 
the  entire  plant  is  not  in  use.  The  above  investment  provides 
capacity  for  nearly  15,000,000  tons  of  pig  iron  a  year,  but  as  we 
are  calculating  on  a  product  of  only  10,000,000  or  two-thirds 
capacity  it  seems  fair  to  charge  depreciation  only  on  two-thirds 
of  the  capital  invested  or  $220,000,000.  Six  per  cent,  on  this 
amount  will  make  an  annual  instalment  of  $13,200,000. 

The  working  capital  should  be  charged  with  an  average  rate 


92  THE  COST  OF  MINING 

of  interest  —  say  5  per  cent.     This  on  the  $95,000,000   calcu- 
lated to  be -the  amount  makes  an  annual  instalment  of  $4,750,000. 
The  cost,  then,  of  making  pig  iron  should  be  charged  with 
the  following  sums  for    amortization  of  fixed  capital: 

For  amortization  of  fixed  capital    $19,800,000 

For  depreciation 13,200,000 

For  interest  on  working  capital 4,750,000 


Total  capital  cost  per  annum $37,750,000 

Equal  to  $3.77  per  ton  on  the  assumed  output.1 

THE  IRON  MINES 

Let  us  return  to  the  source  of  operations  and  consider  what 
iron-ore  resources  the  company  owns.  According  to  the  reports 
of  the  Minnesota  Tax  Commission  the  various  properties  owned 
by  the  Oliver  Iron  Mining  Company  on  the  Mesabi  range  have  in 
sight  920,000,000  tons.  This,  I  believe,  is  an  estimate  only  of 
those  ores  which  are  at  present  merchantable.  The  large  quan- 
tities of  lower-grade  ores  on  the  western  portion  of  the  Mesabi 
range,  which  depend  upon  concentration  for  their  utilization, 
have  not,  I  believe,  been  reported.  The  discoveries  of  this  kind 
of  ore  are  very  extensive,  and  as  experiments  have  gone  to  the 
point  of  demonstrating  the  practicability  of  concentrating  them, 
these  ores  should  be  considered  as  a  resource.  What  the  total 
volume  of  such  ores  may  be  I  can  only  guess,  but  I  should  say 
that  it  would  not  fall  far  short  of  300,000,000  tons  of  concentrates, 

1  These  figures  are  different  from  those  calculated  in  an  article  on  this 
subject  of  which  the  present  chapter  is  substantially  a  reprint.  In  that 
article  the  total  capital  was  estimated  at  $475,000,000,  on  which  an  amortiza- 
tion charge  of  6  per  cent,  or  $28,500,000  was  made.  Further  investigation 
has  revealed  some  inaccuracies  in  this  calculation,  principally  in  the  items  of 
working  capital  and  in  the  value  of  blast-furnace  property. 

Furthermore,  the  present  treatment  of  the  subject  seems  more  logical  and 
more  in  accordance  with  the  calculation  of  similar  costs  of  our  other  indus- 
tries, treated  in  other  chapters. 

In  the  article  mentioned  I  assumed  a  royalty  charge  of  40  cents  per  ton. 
In  this  chapter  this  has  been  cut  down  to  20  cents,  the  estimate  made  by 
Mr.  Carnegie  as  the  actual  payments  made  on  the  present  arrangements  by 
the  corporation  on  all  its  ores ;  the  change  is  made  on  the  theory  that  the  amor- 
tization of  capital  and  the  depreciation  of  the  plants  calculated  for  the  min- 
ing properties  are  sufficient  to  cover  the  royalty  that  a  company  legitimately 
charged  itself  with.  In  other  words,  I  am  trying  to  account  for  the  expen- 
ditures which  it  seems  the  company  actually  makes. 


COST  OF  MINING  LAKE  SUPERIOR  IRON  93 

making  a  total  of  probable  ore  on  the  Mesabi  range  of 
1,220,000,000  tons. 

As  to  the  ore  resources  on  the  old  ranges  I  have  no  means  of 
making  an  estimate.  It  is  to  be  remembered  that  these  mines 
extend  to  great  depths  and  that  the  exploration  of  them  in 
advance  is  not  easy,  but  on  the  other  hand  many  of  them  are 
exceedingly  persistent  and  have  already  been  worked  for  a  great 
many  years  with  no  signs  of  exhaustion.  Assuming  that  these 
mines  may  be  counted  on  to  produce  as  much  in  the  future  as 
they  have  in  the  past,  we  get  an  estimate  of  114,000,000  tons  for 
the  old  ranges,  that  is,  outside  of  the  Mesabi  range.  Therefore, 
I  would  estimate,  in  round  numbers,  the  total  ore  resources  of 
the  Steel  Corporation  in  Lake  Superior  at  1,300,000,000  tons. 

It  will  be  seen  that  I  have  estimated  for  the  exploration  and 
finding  of  these  ores,  outside  of  cost  of  mining  plants  in  opera- 
tion, $15,000,000.  This  seems  to  be  an  extremely  moderate 
estimate  of  cost  for  putting  in  sight  such  enormous  reserves,  but 
as  far  as  I  can  judge  by  the  inquiries  that  I  have  made  the  sum 
is  somewhere  near  the  mark.  Explorations  on  the  Mesabi  range 
have  been  extraordinarily  fruitful,  and  the  cost  for  drilling  seems 
to  be  not  much  over  1  cent  per  ton  developed. 

ROYALTIES 

A  very  large  proportion  of  the  ores  controlled  by  the  Steel 
Corporation  is  not  held  in  fee,  but  under  leases  on  which  the 
company  pays  a  varying  rate  of  royalty.  This  royalty  has  shown 
a  constant  tendency  to  increase.  Many  of  the  earlier  leases 
provide  for  a  royalty  of  only  25  cents  per  ton  and  the  leases 
were  made  for  periods  of  20  years  or  more.  In  some  cases  these 
leases  are  already  near  termination  and  new  leases  will  have  to 
be  made  at  an  advanced  royalty.  Some  of  the  latest  leases 
provide  for  royalties  of  85  cents  per  ton  on  standard  ores  with 
provision  for  still  further  increases. 

It  is  probable  that  under  present  conditions  the  company 
pays  an  average  of  not  over  20  cents  per  ton,  because  a  good 
deal  of  its  ores  are  mined  from  its  own  lands,  but  it  is  manifestly 
unfair  to  the  Steel  Corporation  not  to  allow  for  its  own  land  a 
royalty  equal  to  that  which  it  must  pay  to  other  owners.  On 
this  basis  it  is  probable  that  the  actual  royalty  allowable  on  the 
ore  should  be  about  40  cents  per  ton. 


94  THE  COST  OF  MINING 

On  the  theory  that  I  have  adopted  for  these  articles,  royalty 
is  not  wholly  an  operating  cost,  but  is  in  a  large  part  a  profit 
paid  to  the  owners  of  lands  out  of  their  exploitation.  Accord- 
ingly I  charge  in  this  estimate  only  the  20  cents  per  ton  actually 
paid  to  other  owners  and  make  up  the  difference  to  the  Steel 
Company  through  the  amortization  of  capital  invested  in  its 
iron  mines  and  explorations. 

COST  OF  ORE  FROM  OLD  RANGES 

At  present  about  two-thirds  of  all  the  ore  from  Lake  Superior 
comes  from  the  Mesabi  range,  but  in  the  case  of  the  Steel  Corpora- 
tion the  proportion  is  over  74  per  cent.  It  is  probable  that  we 
would  not  be  far  wrong  if  we  adopted  a  proportion  of  70  per  cent, 
from  the  Mesabi  range  and  30  per  cent,  from  all  the  others.  By 
making  the  above  division  we  may  make  a  reasonably  close  esti- 
mate of  the  cost  of  mining  in  the  Lake  Superior  ores  in  general. 

On  the  old  ranges  the  problem  is  essentially  uniform.  That 
is  to  say,  there  is  no  great  difference  in  mining  ore  on  the  Menom- 
inee  range,  or  on  the  Vermilion  range.  In  all  cases  the  work  is 
done  entirely  underground,  usually  at  depth  between  500  and 
1500  ft.  Individual  mines,  of  course,  show  great  variations. 
In  some  cases  the  ore  is  extremely  hard  and  in  other  cases  ex- 
tremely soft.  Some  mines  have  one  large  body  of  soft  ore; 
others  have  a  number  of  comparatively  small  bodies  of  hard  ore, 
but  these  individual  differences  occur  about  equally  on  all  the 
ranges. 

The  cost  may  be  estimated  as  a  function  of  the  output  per 
man  per  day.  In  the  case  of  the  hard-ore  mines,  the  output 
per  man  is  as  low  as  2|  tons  per  man,  while  in  some  of  the  most 
favorable  soft-ore  mines  the  output  exceeds  5  tons  per  man. 
Now,  the  average  wages  in  the  Lake  Superior  region  for  all  men 
employed  may  be  calculated  at  $2.60  per  day.  We  may  further 
estimate  that  wages  account  for  approximately  60  per  cent,  of 
the  cost  at  the  mines. 

It  is  probable  that  the  actual  operating  cost  may  be  calcu- 
lated at  the  rate  of  $4.25  per  man  employed.  On  this  basis,  if 
a  mine  gets  out  2J  tons  per  man,  its  operating  cost  will  be  $1.70 
per  ton;  if  it  gets  out  5  tons,  its  cost  will  be  85  cents.  I  believe 
the  actual  figures  on  the  average  would  fall  about  half-way  be- 
tween these  extremes,  and  that  the  average  output  for  the  old 


COST  OF  MINING  LAKE  SUPERIOR  IRON  95 

range  mines  would  be  somewhere  near  3|  tons  per  man.     This 
would  give  a  cost  of  about  $1.15  at  the  mines,  exclusive  of  taxes. 


COSTS  ON  THE  MESABI  RANGE 

The  cost  of  mining  on  the  Mesabi  range  is  determined  almost 
absolutely  by  the  depth  of  the  surface  covering.  If  the  orebody 
is  thin  and  the  overlying  surface  deep,  it  is  necessary  to  mine 
the  ore  by  underground  methods.  In  this  case  the  cost  of 
mining  on  the  Mesabi  will  be  approximately  90  cents  per  ton, 
the  average  output  per  man  being  4J  tons. 

Open-pit  mining  varies  greatly  in  cost.  This  work  is  now  done 
universally  by  means  of  steam  shovels  and  the  difficulty  varies 
according  to  the  proportion  of  overburden  to  ore,  the  texture  of 
the  ore,  the  proportion  of  boulders  and  tongues  of  country  rock 
in  the  orebody,  and  the  amount  of  water  to  be  pumped.  These 
various  factors  cause  abrupt  variations  in  the  cost. 

We  may  calculate  that  the  removal  of  stripping  costs  32  cents 
per  yard.  If  one  yard  of  stripping  uncovers  a  yard  of  ore  we 
will  have  one  yard  of  ore  containing  2^  tons  mined  at  a  cost  of 
removing  2  yards  of  material,  or  64  cents,  making  the  mining 
cost  25.6  cents  per  ton  of  ore.  To  this  cost,  however,  must  be 
added  the  interest  on  capital  invested  in  preliminary  stripping 
and  other  costs  of  preliminary  development  of  the  mine,  the  cost 
of  pumping  and  of  certain  general  expenses  that  do  not  occur  on 
the  ground,  so  that  when  equal  amounts  of  stripping  and  of  ore 
are  removed,  I  calculate  that  the  cost  will  be  decidedly  over 
30  cents  per  ton.  This  estimate  does  not  include  the  taxes  which 
I  shall  presently  discuss  separately. 

It  is  evident  that  the  proportion  of  stripping  to  the  ore  does 
not  vary  directly  according  to  the  relative  thickness  of  the  sur- 
face and  the  underlying  ore;  it  is  a  function  of  these  factors 
combined  with  several  other  factors.  The  glacial  material  is 
usually  much  more  uniform  in  thickness  than  the  orebodies 
underneath.  The  latter  are  usually  trough-shaped  with  many 
irregularities  at  the  sides  and  bottom.  Furthermore,  pits  must 
have  sloping  sides  so  that  in  cases  where  the  depth  of  the  ore  is 
equal  to  that  of  the  overburden  there  will  still  be  a  considerably 
larger  volume  of  overburden  removed  from  the  pit  than  there 
will  be  of  ore.  These  considerations  induce  a  good  deal  of  cau- 


96  THE  COST  OF  MINING 

tion  on  the  part  of  operators  in  the  question  of  deciding  upon 
open-cut  mining  where  the  overburden  is  deep. 

OPEN  CUT  vs.  UNDERGROUND  MINING 

When  the  exact  proportion  of  stripping  to  ore  can  be  worked 
out,  it  is  a  simple  question  of  arithmetic  to  figure  where  it  will 
pay  to  adopt  underground  mining  instead  of  open  pits.  As  the 
cost  of  underground  mining  is  about  90  cents  per  ton,  when 
open-pit  operations  are  cheaper  than  that,  theoretically  the 
mining  should  be  done  by  the  latter  method.  But  a  good  many 
considerations  come  in  to  interfere  with  carrying  this  method  to 
its  logical  limits.  Among  these  may  be  pointed  out  the  necessity 
of  investing  a  large  amount  of  money  in  excavating  the  over- 
burden before  mining  can  be  undertaken.  In  the  case  of  con- 
panies  that  are  financially  weak  this  is  a  matter  of  considerable 
importance. 

In  many  cases  where  open-pit  mining  would  have  been  much 
cheaper,  the  ore  has  been  mined  underground  because  the  mine 
could  be  opened  more  rapidly  and  a  certain  profit  more  quickly 
realized  even  though  the  operators  knew  that  they  were  not 
securing  the  best  costs.  This  argument  does  not  apply  to  the 
Steel  Corporation,  of  which  the  capital  is  abundant  for  under- 
taking operations  in  the  most  comprehensive  way.  As  a  matter 
of  fact,  it  is  in  many  cases  resorting  to  open-pit  methods  at  mines 
where  formerly,  under  other  owners,  the  work  was  done  under- 
ground. 

EXIGENCIES  OF  OPEN-CUT  OPERATIONS 

At  first  glance  it  would  seem  as  if  when  a  yard  either  of  ore 
or  of  waste  can  be  dug  out  by  steam  shovels  for  32  cents,  that  the 
cost  per  ton  would  be  approximately  13  cents,  and  that,  there- 
fore, it  would  be  as  cheap  to  mine  almost  7  tons  in  an  open  pit 
as  it  is  to  mine  1  ton  underground.  In  other  words,  6  tons  of 
stripping  might  be  removed  to  secure  1  ton  of  ore.  This  would 
be  the  case  were  there  no  expense  involved  in  mining  except  the 
actual  digging.  As  a  matter  of  fact,  there  are  other  expenses 
that  amount  to  considerable.  One  of  these,  the  interest  on  the 
money  thus  locked  up  in  stripping,  I  have  already  pointed  out, 
but  a  still  more  important  cause  for  hesitation  in  adopting  open- 
pit  mining  to  its  full  apparent  limit  is  the  considerable  variation 


COST  OF  MINING   LAKE  SUPERIOR  IRON  97 

in  the  cost  of  steam-shovel  work  in  different  parts  of  the  same 
mine.  Where  the  ores  are  soft  and  uniform  a  steam  shovel  will 
undoubtedly  dig  a  large  amount  of  ore.  In  some  mines  the  cost 
of  digging  ore  for  a  period  may  go  as  low  as  6  or  7  cents  per  ton, 
but  this  may  be  followed  by  another  period  when  the  costs  may 
be  several  times  as  high. 

For  instance,  in  1906,  at  the  Mountain  Iron  mine  an  output 
of  2,560,000  tons  was  obtained  with  a  force  of  500  men.  The 
bulk  of  the  work  was  done  in  eight  months,  say  200  days.  At 
an  average  cost  of  $4.25  per  man  per  day  we  get  for  this  period 
a  total  cost  of  about  $425,000.  Supposing  that  for  the  remainder 
of  the  year  one-half  the  force  was  occupied,  we  must  increase 
the  estimated  cost  by  about  $125,000,  making  a  total  for  the  year 
of  $550,000.  This  equals  21  cents  per  ton.  In  1907,  with  an 
output  of  1,973,000  tons,  1200  men  were  employed.  This  indi- 
cates a  cost  of  more  than  65  cents  per  ton. 

A  part  of  the  increase  was  due,  no  doubt,  to  an  additional 
volume  of  the  stripping  undertaken,  but  a  considerable  part  of 
the  increase  cannot  thus  be  explained.  In  the  orebody  itself 
changes  were  encountered  that  not  only  diminished  greatly  the 
output  per  steam  shovel,  but  also  greatly  increased  the  number 
of  men  employed  per  shovel.  Up  to  1906  the  total  number  of 
men  required  in  shops,  train  crews,  track  laborers,  etc.,  per 
steam  shovel  never  exceeded  75;  since  then  it  has  been  100. 

The  reasons  for  this  are:  (1)  The  ore  itself  has  become  much 
harder,  frequently  breaking  into  great  slabs  and  chunks  that 
have  to  be  sledged  to  make  them  suitable  for  reduction  in  the 
blast  furnace.  (2)  Owing  to  the  irregularity  of  the  bottom  of 
the  deposit  it  is  often  impossible  to  provide  adequate  working 
faces  for  the  steam  shovels,  so  that  along  the  bottom  and  sides 
the  shovels  frequently  have  to  take  shallow  cuts,  and  sometimes 
the  shovels  suddenly  run  into  worthless  bars  of  rock.  When  the 
last  occurs,  the  machine  must  be  moved  to  a  new  working  place. 
(3)  Boulder-like  masses  of  worthless  country  rock  occur  in  the  ore 
which  must  be  removed  as  waste.  In  a  word  the  excavation  of  ore 
by  steam  shovels,  after  the  stripping  is  all  done,  may  be  much 
more  expensive  than  is  popularly  believed. 


THE  COST  OF  MINING 


UNWATERING  THE  OPEN  PITS 

The  cost  of  pumping  must  be  fully  as  high  for  open-pit  as 
for  underground  mining  and  must  be  kept  up  just  as  steadily.  The 
great  pits  form  catchment  basins,  often  many  scores  of  acres  in 
extent,  and  in  the  event  of  heavy  rains,  which  are  far  from  un- 
common on  the  Mesabi  range,  the  volume  of  water  is  often  so 
great  as  to  cause  work  to  be  suspended.  Fortunately  the  ore 
is  porous  so  that  the  pumping  may  all  be  done  from  a  single 
shaft  so  located  as  to  provide  for  the  drainage  of  the  entire  ore- 
body  for  all  times.  The  volume  of  water  ejected  from  a  single 
orebody  is  frequently  5000  to  6000  gal.  per  minute.  I  estimate 
that  when  5000  gal.  per  minute  is  pumped  from  a  depth  of  300 
ft.  and  the  output  is  1,500,000  tons  per  year,  the  cost  of  pumping 
will  be  7  or  8  cents  per  ton.  I  suppose  this  is  about  a  maximum 
cost  for  the  Mesabi. 

Now,  returning  to  the  question  of  where  open-pit  work  should 
end  and  underground  mining  should  begin,  we  find  that  the  con- 
ditions are  about  as  follows:  The  actual  cost  of  digging  ore  in  a 
pit  where  the  ore  is  hard  and  sorting  is  necessary  may  run  up  as 
high  as  40  or  50  cents  per  ton.  This  cost  will  be  reached  when  a 
steam  shovel  with  a  crew  of  100  men  at  an  average  cost  of  $4.25 
per  day  digs  20  cars,  or  between  800  and  1000  tons  per  day.  The 
cost  will  not  exceed  50  cents  per  ton,  because  ore  can  be  sorted 
and  loaded  as  cheaply  as  that  by  hand  without  any  steam  shovel. 
Let  us  then  put  50  cents  per  ton  as  a  maximum  cost  for  digging. 

The  cost  of  administration,  interest  on  development  capital 
(largely  stripping) ,  and  of  pumping,  is,  of  course,  variable.  Where 
500,000  or  more  tons  are  mined  in  a  year,  all  these  expenses 
combined  are  not  likely  to  exceed  15  cents.  At  the  worst,  then, 
we  have  65  cents  per  ton  as  the  cost  of  mining  in  open  pits,  out- 
side of  stripping.  Now,  as  underground  mining  will  cost  90  cents 
per  ton,  we  have  the  difference  between  90  cents  and  65  cents 
to  invest  in  stripping.  This  25  cents  will  remove  2  tons  of  over- 
burden. 

I  therefore  conclude  that  it  will  pay  to  remove  2  tons  of  over- 
burden to  1  ton  of  ore,  under  the  least  favorable  mining  condi- 
tions. Under  the  most  favorable  conditions,  where  both  the 
ore  and  the  overburden  are  soft  and  uniform,  the  economical 
proportion  may  rise  as  high  as  4  or  even  5  to  1. 


COST  OF  MINING  LAKE  SUPERIOR  IRON  99 

AVERAGE  COST  OF  MINING  ON  THE  MESABI  RANGE 

This  is  a  point  on  which  no  one  can  get  exact  information 
without  access  to  the  cost  statements  of  at  least  fifty  different 
properties,  but  in  a  general  way  I  think  we  can  get  a  rough  esti- 
mate that  will  be  sufficient  for  practical  purposes.  It  will  appear 
that  the  actual  mining  cost  of  the  ore  at  the  mines  is  not,  after 
all,  one  of  the  greatest  factors  in  the  final  cost  of  producing  pig 
iron. 

Returning  to  our  output  per  man  per  day  as  a  basis  for  cal- 
culating costs  I  find  that  during  1907  the  mines  of  the  Steel  Cor- 
poration in  the  Hibbing  district  produced  approximately  9,000,000 
tons  of  ore.  This  ore  came  largely  from  great  open-pit  proper- 
ties, but  some  of  it  came  from  underground  mines.  I  am  informed 
that  the  total  number  of  men  employed  was  about  4500  with 
60  steam  shovels.  Supposing  that  the  whole  of  this  force  was 
employed  for  eight  months,  and  half  of  it  for  the  remaining  four 
months  of  the  year,  and  assuming  that  26  working  days  consti- 
tute a  month,  we  get  an  equivalentof  260  days  with  4500  men, 
each  costing  $4.25.  This  gives  us  a  total  of  approximately 
$5,000,000,  or  in  round  numbers,  55  cents  per  ton. 

This  estimate  is  open  to  doubt  on  several  points,  two  of  which 
are  whether  the  amount  of  stripping  that  was  done  kept  pace 
with  or  exceeded  the  amount  of  ore  extracted,  and  whether  the 
rough  figures  of  labor  employed  are  actually  near  the  truth. 

As  to  these  facts  I  have  no  means  of  judging  except  the  most 
general  impressions,  but  I  am  satisfied  that  at  the  worst  my 
information  is  not  far  enough  astray  to  make  the  cost  hopelessly 
inaccurate.  In  a  general  proposition  of  this  kind  no  one  attempts 
to  get  down  to  niceties,  and  there  is  no  occasion  for  it.  When  I 
state  that  the  average  ore  mined  in  the  Hibbing  district  costs 
55  cents  per  ton,  I  may  be  15  or  20  per  cent,  astray  this  year, 
and  next  year  I  may  be  right. 

The  mines  of  Hibbing  undoubtedly  are  the  most  favorable 
on  the  Mesabi  range  for  cheap  costs.  They  have  the  largest, 
softest,  and  most  uniform  orebodies,  and  are  worked  on  the 
largest  scale.  It  does  not  seem  improper,  therefore,  that  if  we 
estimate  the  cost  at  55  cents  per  ton  at  Hibbing,  we  should  in- 
crease this  to  60  cents  for  the  whole  range.  I  therefore  estimate 
that  the  average  cost  of  mining  on  the  Mesabi  range  for  both 


100  THE  COST  OF  MINING 

underground  and  surface  is  about  60  cents  per  ton,  exclusive  of 

taxes. 

TAXES 

The  laws  of  Minnesota  tax  mining  properties  for  what  ore 
they  have  in  sight.  The  tonnage  developed  is  reported  by  the 
mining  companies  to  the  assessor,  who  puts  a  valuation  upon  it 
according  to  the  quality  and  accessibility  of  the  ore.  For  pur- 
poses of  taxation,  discovered  ores  are  placed  in  five  or  six  differ- 
ent grades  with  a  minimum  valuation  of  8  cents  per  ton  and  a 
maximum  of  33  cents.  Roughly,  the  ore  developed  seems  to 
average  about  15  cents  per  ton  in  valuation.  This  valuation  is 
taxed  just  as  any  other  assessed  property  is  taxed,  the  levy  being 
somewhere  in  the  neighborhood  of  1J  per  cent. 

Since  the  Steel  Corporation  has  in  Minnesota  on  the  Mesabi 
and  Vermilion  ranges  about  930,000,000  tons  on  the  assessors' 
lists,  it  would  appear  that  the  total  valuation  would  be  somewhere 
in  the  neighborhood  of  $140,000,000  and  the  taxation  approxi- 
mately $2,000,000.  On  this  basis  we  find  that  the  company 
must  pay  on  its  present  output  of  approximately  18,000,000 
tons,  more  than  10  cents  per  ton  on  its  actual  shipments. 

This  taxation  is  a  recent  development.  I  do  not  believe 
that  the  company  has  as  yet  actually  paid  so  much,  but  on  a 
basis  of  present  and  future  conditions  it  does  not  seem  like  an 
excessive  estimate.  The  fairness  of  this  mode  of  taxation  it  is  not 
my  present  purpose  to  discuss,  but  it  is  very  evident  that  a  com- 
pany with  large  ore  reserves  and  a  small  output  may  be  taxed 
much  more  than  a  company  with  a  large  output  and  small  ore 
reserves.  For  instance,  if  the  Steel  Corporation  had  only  five 
years'  ore  in  sight  instead  of  50  years,  its  taxes  in  its  present  ton- 
nage would  be  only  1  cent  per  ton  instead  of  10  cents.  For  this 
reason  there  are  probably  vast  differences  in  the  tax  rates  of 
various  companies  in  the  Mesabi  range,  and  I  suppose  the  Steel 
Corporation  undoubtedly  pays  more  taxes  per  ton  of  output 
than  any  of  the  others. 

EXPLORATIONS  AND  MAPS 

It  may  be  interesting  to  digress  for  a  moment  to  consider  the 
value  of  combination  in  the  operation  of  these  mines.  Since  its 
organization  the  Steel  Corporation  has  pursued  a  most  complete, 
scientific,  and  satisfactory  plan  of  exploring  and  mapping  its 


COST  OF  MINING   LAKE  SUPERIOR  I^QNV-         -1Q 


ore  reserves.  It  has  employed  expert  geologists  and  engineers 
for  this  purpose.  It  has  secured  as  much  land  as  it  could  for 
exploration  and  has  explored  it  to  the  point  of  determining, 
before  any  mining  is  done,  the  situation,  volume,  shape,  and 
economic  characteristics  of  the  orebodies  on  large  tracts. 

In  other  words,  the  process  of  drilling  and  test-pitting  has 
been  carried  on  until  the  depth  of  surface,  the  quality  of  the  ore, 
its  probable  admixture  with  boulders  and  tongues  of  barren 
rock,  and  its  thickness  have  all  been  determined.  This  informa- 
tion is  expressed  on  maps  which  show  the  contours  not  only  of 
the  surface  of  the  land,  but  also  of  the  surface  of  the  orebody 
underlying  the  glacial  drift  and  the  contours  of  the  bottom  of 
the  orebody. 

The  information  permits  the  planning  of  the  mining  work 
in  such  a  way  that  there  shall  be  no  duplication  of  effort.  The 
drainage  of  an  orebody  can  be  provided  for  with  a  single  shaft 
so  situated  that  it  reaches  the  bottom  of  the  deposit.  The  prob- 
lem of  mining  is  solved  beforehand.  In  other  words,  the  pro- 
priety of  mining  in  open  pits  or  underground  is  predetermined. 
The  location  of  pits,  of  dumping  grounds,  of  railroad  tracks  and 
of  all  equipment  is  established  once  for  all. 

DRAWBACKS  OF  INDIVIDUAL  MANAGEMENT 

Now,  suppose  these  same  orebodies  were  to  be  mined  by  dif- 
ferent companies  as  was,  or  would  have  been,  the  case  twenty 
years  ago.  The  orebodies  are  sometimes  a  mile  or  even  two  miles 
in  length  and  quite  irregular  in  outline.  The  ordinary  course  of 
the  longest  axis  of  an  orebody  is  northwest  and  southeast,  so  that 
it  would  cross  the  subdivisions  of  the  land  diagonally.  Such  an 
orebody  would  inevitably  occur  on  several  sections,  quarter 
sections,  or  40-acre  tracts.  The  land  ownership  is  scattered 
and  irregular.  It  is  seldom  that  any  tract  belonging  to  a  single 
owner  is  larger  than  160  acres  and  many  tracts  are  only  40  acres 
in  area.  As  a  matter  of  fact  most  of  the  great  orebodies  on  the 
Mesabi  range  belonged  originally  to  five  or  six  different  com- 
panies. 

In  such  a  case  it  is  evident  that  each  company  would  have 
its  individual  management,  its  own  problem  of  finance,  and  its 
own  requirements  in  the  way  of  output.  The  mine  located  on 
one  particular  40-acre  tract  might  find  the  surface  only  20  ft. 


THE   COST  OF  MINING 


deep,  and  it  would  plan  an  open  pit.  Since  the  neighboring 
ground  was  seldom  thoroughly  explored,  the  waste  from  this 
open  pit  might  very  likely  be,  and  indeed  was  in  many  cases, 
dumped  on  ground  afterward  proved  to  be  ore-bearing. 

The  next  mine  on  the  same  orebody  might  find  the  surface  to 
be  locally  100  ft.  deep,  and  if  the  operating  company  were  poor 
and  in  a  hurry  for  ore,  it  would  undoubtedly  open  up  its  mine 
underground.  The  result  of  this  would  be  that  large  sections 
of  the  surface  would  be  caved  down  into  the  middle  of  the  ore, 
thus  preventing  forever  the  successful  stripping  of  that  part  of 
the  orebody. 

ECONOMY  OF  LARGE  OWNERSHIP 

But  if  this  whole  orebody  were  in  the  possession  of  the  Steel 
Corporation,  its  explorations  might  show  that  the  surface  aver- 
aged about  50  ft.  and  that  it  might  be  economical  to  mine  all 
the  ore  by  an  open  pit.  A  single  pump  shaft  would  be  sufficient. 
No  waste  would  be  dumped  on  neighboring  ore-bearing  ground. 
In  short,  a  vast  amount  of  duplicated  expense  would  be  avoided. 
This  is  where  the  value  of  such  a  combination  comes  in. 

The  Steel  Corporation  cannot  get  its  work  done  any  cheaper 
than  anybody  else.  If  it  has  to  sink  a  shaft,  for  instance,  it 
cannot  do  it  any  cheaper  than  any  one  of  the  half  dozen  mines 
that  it  might  replace,  but  it  could  on  the  average  sink  one  shaft 
for  one-sixth  the  expense  that  it  would  cost  other  people  to  sink 
six  shafts. 

It  is  worth  remarking  in  this  connection  that  the  Steel  Cor- 
poration has  been  magnificently  managed.  It  has  not  striven 
for  minute  and  near-sighted  economies.  It  has  not  tried  to 
outdo  its  rivals  in  points  of  local  rivalry,  but  it  has  kept  in  mind 
the  broad  outline  of  its  operations  and  has  tried  to  make  use  of 
its  capital  and  opportunities  in  ways  that  every  fair-minded 
man  would  recognize  as  legitimate.  The  company  can  do  this 
only  as  long  as  it  is  well  managed,  but  up  to  the  present  it  is 
only  fair  to  say  that  its  activities  have  been  well  directed  and 
that  its  economies  are  such  as  to  be  certainly  of  no  disadvantage 
to  the  public  at  large,  but  on  the  contrary  in  many  ways  a  great 
benefit. 


COST  OF  MINING  LAKE  SUPERIOR  IRON  103 


TOTAL  COST  OF  ALL  LAKE  SUPERIOR  ORES 

In  order  to  keep  the  proportion  of  things  in  mind,  even  at  the 
expense  of  some  repetition,  we  may  state  that  the  cost  of  mining 
Lake  Superior  iron  ores  is  for  Mesabi  ores,  $0.60;  old  range  ores, 
$1.15  a  ton.  Since  the  Steel  Corporation  mines  about  7  tons  of 
ore  on  the  Mesabi  range  for  over  3  tons  mined  on  the  old  ranges, 
we  may  calculate  that  the  actual  cost  of  10  tons  would  be  $7.65 
or  76 1  cents.  To  this  we  must  add  taxes  which  on  the  Mesabi 
range  are  not  far  short  of  10  cents  per  ton.  In  order  to  make 
a  round  figure  we  may  state  that  all  Lake  Superior  ores  would 
cost  on  the  ground  about  85  cents  per  ton,  including  taxation. 
To  this  we  may  add  20  cents  per  ton  for  royalty,  making  the 
total  cost  of  Lake  Superior  iron  ores  at  the  mine,  ready  for  ship- 
ment, $1.05  per  ton. 

TRANSPORTATION  OF  ORES 

The  ores  which  are  mined  on  both  shores  of  Lake  Superior, 
either  in  northern  Wisconsin  and  Michigan  or  in  Minnesota, 
must  all  be  transported  to  the  region  lying  south  of  the  Great 
Lakes  for  smelting.  The  region  of  iron  manufacture  extends 
from  the  neighborhood  of  Chicago  and  Milwaukee  at  the  north- 
west, eastward  in  a  widening  belt  to  Pittsburg  and  Buffalo  and 
thence  east  to  the  neighborhood  of  New  York  City. 

The  factors  which  dictate  the  production  of  pig  iron  in  this 
region  are  two,  namely,  the  presence  of  coal  and  facilities  for 
distribution.  If  we  take  Pittsburg  as  the  most  active  and  cen- 
tral point  in  iron  manufacture  to  represent  average  conditions 
we  find  that  the  ores  must  be  transported  about  1000  miles  in 
three  sections:  (1)  There  is  the  land  haul  from  the  mine  to  Lake 
Superior  ports;  (2)  the  lake  haul  from  Lake  Superior  to  Lake 
Erie;  (3)  the  land  haul  from  Lake  Erie  to  Pittsburg. 

The  first  division  of  the  work  is  covered  by  five  or  six  differ- 
ent roads  —  three  in  Minnesota  and  the  remainder  in  Michigan 
and  Wisconsin.  The  length  of  haul  is  variable;  from  Ely,  Minn., 
on  the  Vermilion  range  to  Two  Harbors,  the  distance  is  about 
90  miles.  Most  of  the  ore  from  the  Mesabi  range  has  to  be  hauled 
from  70  to  100  miles,  so  that  I  suppose  an  average  distance  for 
the  north  shore  roads  is  perhaps  80  miles.  Most  of  the  ore  on 
the  Marquette  range  is  less  than  20  miles  distant,  while  that  on  the 


104 


THE   COST  OF  MINING 


COST  OF  MINING  LAKE  SUPERIOR  IRON  105 

Menominee  range  is  about  50,  and  from  the  Gogebic  range 
the  distance  is  only  about  30  or  40  miles  to  the  harbor. 

The  published  rates  on  ore  from  mines  in  Minnesota  to  the 
lakes  is  uniformly  80  cents  per  ton;  from  the  Gogebic  range  to 
Ashland,  40  cents;  from  the  Menominee  range  to  Escanaba 
40  cents,  and  from  the  Marquette  range  to  Marquette,  25  cents. 
In  the  case  of  any  company  other  than  the  Steel  Corporation  it 
would  be  necessary  to  take  these  rates  at  their  face  value,  but 
in  this  case  there  is  reason  to  believe  that  the  transportation  is 
the  most  profitable  part  of  the  business. 

The  company  does  not  own  any  railroads  on  the  southern 
shore,  but  its  two  railroads  on  the  northern  shore,  namely,  the 
Duluth  &  Iron  Range  and  the  Duluth,  Missabe  &  Northern, 
haul  about  52  per  cent,  of  the  ore  produced  in  the  entire  region 
The  corporation  also  owns  a  fleet  of  boats  on  the  lakes,  probably 
sufficient  to  transport  an  equal  amount.  It  also  owns  the  Pitts- 
burg,  Bessemer  &  Lake  Erie  railroad,  which  hauls  most  of  the 
ore  to  Pittsburg.  I  think  we  shall  not  be  far  wrong  if  we  assume 
that  so  far  as  costs  go  the  results  are  the  same  as  they  would  be 
if  the  company  transported  all  its  own  ore  from  the  Minnesota 
mines  to  the  furnaces. 

While  the  freight  on  ores  from  the  south  shore  to  Pittsburg  is 
undoubtedly  less  than  that  from  Minnesota,  it  is  also  true  that  the 
Steel  Corporation  must  pay  on  ore  transported  from  those  ranges 
a  profit  to  independent  railroad  companies  which  it  does  not  pay 
in  the  case  of  Minnesota  ores.  Its  profits  on  Minnesota  ores  which 
it  hauls  for  other  companies  probably  more  than  counterbalance 
the  amount  it  pays  in  profits  to  others  on  the  Michigan  ores. 

AUTOMATIC  HANDLING  OF  ORE 

Iron  ore  is  about  the  most  easily  handled  material  in  the 
world.  Its  specific  gravity  is  high,  so  that  the  ton  does  not 
occupy  much  bulk,  and  it  is  absolutely  uninjured  by  the  rough- 
est treatment.  As  a  matter  of  fact,  it  is  loaded  directly  into 
dump  cars  either  by  the  steam  shovels  or  directly  from  the  mine 
shafts.  It  is  made  up  in  trains  of  apporximately  2000  tons  of 
net  freight  and  hauled  over  roads  of  very  slight,  or  no  adverse 
gradients  to  the  lake  docks.  There  it  is  dumped  by  gravity 
right  into  the  hold  of  the  ship  and  transported  in  large  cargoes 
on  waters  that  are  generally  tranquil,  and  unloaded  by  machinery 


106  THE  COST  OF  MINING 

at  the  lower  lake  ports,  to  be  again  delivered  to  the  dump  cars 
and  carried  as  before  to  the  furnaces. 

I  believe  the  operating  cost  of  hauling  such  material  by  rail 
cannot  exceed  J  cent  per  ton  per  mile.  On  this  basis  transpor- 
tation from  the  mines  to  Duluth  would  cost  about  20  cents,  and 
from  Lake  Erie  to  Pittsburg  about  40  cents  per  ton,  making  a 
total  for  rail  haul  of  60  cents.  The  lake  freight  in  all  probability 
will  cost,  including  unloading,  an  average  of  about  40  cents. 
Thus  we  have  a  total  transportation  cost  of  $1  per  ton  from  the 
mines  to  Pittsburg.  This,  of  course,  is  merely  operating  cost, 
and  does  not  include  the  necessary  return  on  the  capital  invested 
in  the  transportation  properties,  but  this  item  I  propose  to  con- 
sider as  a  lump  to  be  added  to  the  cost  of  pig  iron  so  that  I 
will  not  discuss  it  here. 

We  have,  then,  ore  delivered  at  the  furnaces  at  Pittsburg  at 
a  total  cost  of  $2.05  per  ton,  distributed  as  follows:  Mining, 
85  cents;  royalty,  20  cents;  transportation,  $1. 

COST  OF  COKE 

Without  going  into  details,  I  think  it  would  be  fair  to  esti- 
mate the  cost  of  Connellsville  coke  to  the  Steel  Corporation  at 
about  $1.40  per  ton.  This  is  on  a  basis  of  70  cents  per  ton  for 
mining  the  coal  and  using  1J  tons  of  coal  per  ton  of  coke  at  a 
coking  cost  of  35  cents.  The  freight  rate  from  Connellsville  to 
blast  furnaces  at  Pittsburg  is  75  cents  per  ton,  so  that  we  may 
calculate  coke  delivered  at  the  furnace  at  $2.15. 

COST  OF  PRODUCING  PIG  IRON 

It  is  not  probable  that  the  average  Lake  Superior  ore  of  to-day 
will  yield  much  over  50  per  cent,  in  pig  iron  before  moisture  is 
deducted.  Since  the  tendency  is  toward  a  gradual  reduction  in 
the  grade  of  the  ore,  it  does  not  seem  far  out  of  the  way  to  assume 
that  two  tons  will  be  required  for  each  ton  of  pig  iron.  We  may 
now  calculate, _ when  an  average  output  of  10,000,000  tons  of  pig 
per  year  is  made,  the  cost  to  be  as  follows:  Use  of  capital,  $3.77; 
2  tons  of  iron  ore  at  $2.05,  $4.10;  1.2  tons  coke  at  $2.15,  $2.58; 
limestone  for  flux,  50  cents;  labor  and  maintenance  at  furnaces, 
$1.40;  general  expense,  25  cents;  total  cost  at  Pittsburg,  $12.70; 
freight  from  Pittsburg  to  New  York,  $2.60;  total  cost  at  New 
York,  $15.30. 


COST  OF  MINING  LAKE  SUPERIOR  IRON  107 

An  interesting  commentary  on  the  correctness  of  these  figures 
is  the  testimony  of  Judge  Gary  in  the  tariff  hearings  before  the 
Ways  and  Means  Committee  of  the  House  of  Representatives.  Mr. 
Gary  gives  costs  for  the  year  1906  for  all  the  furnaces  of  the  United 
States  Steel  Corporation.  His  figures  are  those  not  of  actual  cost, 
but  of  market  prices  for  iron  ores,  coke,  and  transportation. 

The  figures  are  as  follows:  Iron  ore  at  $4.70  per  ton;  cost  of 
ore  used  in  a  ton  of  pig  iron,  $8.62;  coke  at  furnace,  $3.93  per 
ton;  coke  used  in  making  a  ton  of  pig  iron,  $4.15;  limestone  per 
ton,  $1.06;  limestone  in  pig  iron,  49  cents;  scrap,  cinder,  and  scale, 
27  cents;  labor  and  maintenance  at  furnaces,  $1.37;  depreciation 
of  furnaces,  40  cents;  total  cost  of  making  a  ton  of  pig  iron,  $15.30. 

From  these  figures  Mr.  Gary  makes  the  following  deductions 
for  net  profits:  On  ores  in  pig  iron,  $2.04;  on  coke  in  pig  iron, 
60  cents;  on  transportation,  $1.07;  total  deductions,  $3.71.  Sub- 
tracting this  amount  we  have  by  Judge  Gary's  estimate  $11.59 
per  ton  as  the  cost  of  pig  iron  at  the  furnaces. 

There  is,  however,  some  doubt  as  to  the  exact  application  of 
the  figures  presented  by  Mr.  Gary.  Any  one  who  is  familiar 
with  testimony  taken  at  a  hearing  will  understand  why  this  is 
so.  I  have  gone  over  the  evidence  and  put  together  the  figures 
in  another  way.  I  do  not  know  which  is  the  most  accurate. 

MR.  GARY'S  FIGURES  IN  DETAIL 

Actual  cost  of  iron  mining  at  all  mines $0.73 

Actual  cost  of  coke  at  ovens    1.21 

Actual  cost  of  iron  ore  at  furnace 2.83 

Actual  cost  of  coke  at  furnace 3.39 

Pig  Iron : 

Iron  ore  per  ton  pig 5.50 

Coke  per  ton  pig    4.07 

Limestone   0.49 

Cinder  and  scale 0.27 

Operating  blast  furnaces 1.38 


$11.71 
Depreciation  of  blast  furnace 0.40 


$12.11 


These  figures  omit  general  expenses,  which,  it  is  explained,  are 
kept  in  a  separate  account. 

It  will  be  noted  that  with  this  explanation  the  sum  total  of 


108 


THE  COST  OF  MINING 


Mr.  Gary's  figures  are  not  far  from  my  independent  estimates. 
It  is  to  be  pointed  out,  however,  that  Mr.  Gary's  figures  are 
for  all  the  furnaces  of  the  company,  while  mine  are  for  Pitts- 
burg  alone.  This  fact  will  make  a  divergence  in  the  details 
unavoidable.  Furthermore,  my  figures  are  for  general  conditions 
as  they  are  at  present,  while  Mr.  Gary's  are  exact  statements  for 
a  single  year.  After  giving  the  matter  considerable  thought  I 
have  decided  to  leave  my  estimates  as  originally  made.  They 
will  at  least  serve  to  show  something  of  the  logic  of  calculat- 
ing costs. 

STATISTICAL  RECORD  OF  THE  U.  S.  STEEL  CORPORATION 

It  was  stated  in  the  foregoing  that  the  Steel  Company  is  as 
much  a  manufacturing  as  a  mining  concern.  While  the  prin- 
cipal motive  of  this  work  is  to  obtain  figures  on  the  cost  of  min- 
ing, it  will  be  interesting,  nevertheless,  to  give  some  idea  of  the 
entire  business  of  this  company,  including  the  data  upon  which 
the  above  discussion  is  based. 

The  following  table  gives  the  total  production  of  the  various 
products  since  the  beginning  of  the  company;  the  average  out- 
put per  year  of  each  commodity  and  the  output  for  the  years 
1907  and  1908: 


Tenn.  C.andl 

not  Included 

PRODUCTS 

1902  to  1907 
Inclusive 

Average 

Iron  Ore  Mined: 
From  Marquette  range    

Tons 

7  806  000 

Tons 

1  301  000 

From  Menominee  range    

11  340000 

1,890  000 

From  Gogebic  range    

9  766  000 

1  628  000 

From  Vermilion  range  .... 

10  129  000 

1  188  000 

From  Mesabi  range   . 

64  421  000 

10  736  000 

Total    

103  462  000 

16  743  000 

Coke  manufactured  

66  744  000 

11  124  000 

Coal  mined,  not  including  that  used  in  making  coke 
Limestone  quarried  

9,786,000 
11  126  000 

1,631,000 
1  854  000 

Blast-Furnace  Products  : 
Pig  iron  

53  767  000 

8  961  000 

Spiegel  

789  000 

131  000 

Ferro-manganese  and  silicon    

327,000 

54,500 

Total    

54  883  000 

9  146  500 

COST  OF   MINING   LAKE  SUPERIOR   IRON 


109 


TABLE  —  Continued 


Tenn.  C.  and  I 

not  Included 

PRODUCTS 

1902  to  1907 
Inclusive 

Average 

Steel  Ingot  Production: 
Bessemer  ingots 

Tons 

41  387  000 

Tons 

6  894  000 

Open-hearth  ingots    

24,536,000 

4,089,000 

Total 

65  923  000 

10  983  000 

Rolled  and  other  Finished  Products  for  Sale: 
Steel  rails 

10  541  000 

1  757  000 

Blooms,  billets,  slabs,  sheet,  and  tin  plate  bars.  . 
Plates                                   

.  5,317,000 
4,068,000 

886,000 
678,000 

Heavy  structural  shapes 

2  370  000 

395  000 

Merchant  steel,  skelp,  hoops,  bands,  and  cotton 
ties         .          

6,006,000 

1,001  000 

Tubing  and  pipe                           ... 

5  277  000 

879  000 

Rods 

1  151  000 

192  000 

Wire  and  products  of  wire  

7,640,000 

1,273,000 

Sheets  —  Black  galvanized  and  tin  plate 

5,390  000 

898  000 

Finished  structural  work 

3  077  000 

513  000 

Angle  and  splice  bars  and  joints   

873,000 

145,000 

Spikes,  bolts,  nuts,  and  rivets  

344,000 

57000 

Axles                                         .... 

840  000 

140  000 

Sundry  iron  and  steel  products 

270  000 

45  000 

Total                                  .            . 

53  164  000 

8  859  000 

Spelter   

167,000 

28000 

Copperas  (sulphate  of  iron)    . 

111  000 

18000 

Universal  Portland  cement    .    .        .        . 

Bbls. 
7,611,000 

Bbls. 
1  268  000 

PRODUCTION 

The  production  of  the  several  subsidiary  properties  for  the 
year  1908,  in  comparison  with  the  results  for  the  year  1907,  is 
shown  in  the  subjoined  table.  In  order  to  make  the  comparison 
upon  relatively  the  same  basis,  the  production  figures  of  the 
Tennessee  Coal,  Iron  &  Railroad  Company  for  the  entire  year 
1907  have  been  included  in  the  results  shown  in  table  on  the 
following  page  for  that  year: 


110 


THE   COST   OF   MINING 


PRODUCTS 

1908 

1907 

Iron  Ore  Mined  in  Lake  Superior  Ore  Region: 
Marquette  range 

Tons 

830,087 

Tons 

1,170  496 

Menominee  range  
Gogebic  range     

1,021,598 
1,078,025 

1,625,358 
1,425,457 

Vermilion  range 

927,206 

1  724  217 

Mesabi  range    
Iron  Ore  Mined  in  Southern  Ore  Region  : 
Tennessee  coal,  iron  &  R.  R.  Go's  mines  

11,272,397 
1,533,402 

16,458,273 
1,576,757 

Total 

16  662  715 

23  980  558 

Coke  Manufactured: 
Bee-hive  ovens  

7,591,062 

12  716013 

By-products  ovens 

578  869 

828  751 

Total    ... 

8,169931 

13  544  764 

Coal  mined,  not  including  that  used  in  making  coke 
Limestone  quarried 

3,008,810 
2  186  007 

3,550,510 
3  201  222 

Blast-Furnace  Products: 
Pi<r  iron 

6  810  831 

11  234  447 

Spiegel   

74716 

130  554 

Ferro-manganese  and  silicon    

48,861 

57  794 

Total 

6  934  408 

11  422  795 

Steel  Ingot  Production  : 
Bessemer  ingots  

4,055  275 

7  556  460 

Open-hearth  ingots    

3,783,438 

5,786,532 

Total    . 

7  838  713 

13  342  992 

Rolled  and  Other  Finished  Steel  Products  for  Sale: 
Steel  rails  
Blooms,  billets,  slabs,  sheet,  and  tin  plate  bars.  . 
Plates  . 

1,050,389 
551,106 
312  470 

1,879,985 
761,195 
894  364 

Heavy  structural  shapes  
Merchant  steel,  skelp,  hoops,  bands,  and  cotton 
ties  

313,733 
577,591 

587,954 
1  338  833 

Tubing  and  pipe  

654  428 

1  174  629 

Rods 

93  406 

126  095 

Wire  and  products  of  wire  

1  275  785 

1  481  226 

Sheets  —  Black,  galvanized,  and  tin  plated  
Finished  structural  work 

770,321 
403  832 

1,070,752 
719  887 

Angle  and  splice  bars  and  other  rail  joints 

84669 

195  157 

Spikes,  bolts,  nuts,  and  rivets  f  
Axles 

40,252 
24  057 

67,991 
189  006 

Sundry  steel  and  iron  products  

54,893 

77,463 

Total    .                             

6  206  932 

10  564  537 

Spelter  

28057 

31  454 

Sulphate  of  iron 

26  411 

24  540 

Universal  Portland  cement 

Bbls. 
4  535  300 

Bbls. 
2  129  700 

COST  OF  MINING   LAKE  SUPERIOR   IRON 


111 


The  corporation  has  been  engaged  from  the  beginning  not 
only  in  managing  and  operating  the  plants  with  which  it  began, 
but  in  adding  thereto  and  expanding  its  business.  The  follow- 
ing table  from  the  report  for  1908  shows  the  estimate  put  upon 
the  increase  of  capital  by  the  officers  of  the  company: 

COMPARATIVE  ANNUAL  PRODUCTIVE  CAPACITY 
April  1,  1901,  and  January  1,  1909 


Capacity 
April  1,  1901 

Tons 

INCREASE  SINCE  APRIL  1,  1901 

Capacity 
January  1,1909 

Tons 

By  Purchase 
of  Union 
and 
Clairton  Cos. 

Tons 

By  Purchase 
of  T.C..I.& 
R.  R.  Co. 

Tons 

Due  to  Addi- 
tions and  Im- 
provements 
made  by  the 
Companies 
after  their 
Acquirement 
by  U.S. 
Steel  Corpn. 
Tons 

Blast-furnace  products 

7,440,000 

1,228,000 

1,000,000 

5,322,000 

14,990,000 

Steel  ingots  

9,425,000 

1,258,000 

500,000 

5,887,000 

17,070,000 

Rolled  and  other  steel 

and    iron    products 
for  sale      

7,719,000 

Bbls. 
500,000 

1,103,000 

400,000 

3,678,000 

Bbls. 
5,600,000 

12,900,000 

Bbls. 
6,100,000 

Cement 

Regarding  these  increases  of  capacity,  it  will  be  observed  that 
no  estimate  is  made  of  the  increase  for  the  property  as  a  whole, 
In  blast-furnace  products  the  increase  is  100  per  cent.;  in  steeel 
ingots  over  80  per  cent.;  in  finished  products,  66§  per  cent.;  and 
in  cement,  1100  per  cent.  Which  of  these  is  most  representative 
of  the  business  of  the  corporation?  No  statement  is  made  as  to 
the  increases  in  natural  resources.  Considering  the  fact  that 
the  company's  business  as  a  finality  resolves  itself  principally 
into  the  sale  of  finished  iron  and  steel  products,  it  seems  most 
reasonable  to  take  the  increase  of  capacity  in  that  particular  as 
representing  most  nearly  the  increase  in  the  company's  whole 
business. 

Let  us  assume,  therefore,  that  the  producing  capacity  of  the 
properties  has  been  increased  by  two-thirds  since  the  organiza- 
tion. 


112  THE   COST  OF  MINING       • 

What  this  increase  has  cost  is  exhibited  by  the  following 
table: 

"  Since  the  organization  of  the  corporation  there  have  been 
expended  for  additional  property  and  construction  (exclusive 
of  the  cost  at  date  of  acquirement  of  Union  Steel  and  Clairton 
Steel  Companies,  and  of  the  stock  of  Tennessee  Coal,  Iron  and 
Railroad  Company)  the  following  amounts: 

For  account  of  the  Gary,  Indiana,  Plant,  including  the  build- 
ing of  the  city  of  Gary  and  terminal  railroad  work  ....  $42,797,229.57 
For  account   of    the   manufacturing    properties    (including 

expenditures  by  U.  S.  Steel  Corporation) '. 116,155,559.41 

For  account  of  the  coke  and  coal  properties 20,056,764.27 

For  account  of  the  iron  ore  properties 23,120,539.17 

For  account  of  the  transportation  properties 49,026,895.81 

For  account  of  the  miscellaneous  properties 4,340,999.14 

Total  capital  expenditures $255,497,987.37 

During  the  same  period  there  was  expended  for  extraordinary 

replacements  and  betterments  the  sum  of 92,534,952.12 

Total    $348,032,939.49 

"  On  account  of  the  foregoing  expenditures  there  were  issued 
and  disposed  of,  bonds,  mortgages,  and  purchase  obligations 
of  subsidiary  companies  to  the  amount  of  $39,172,863.37,  leaving 
a  balance  of  expenditure  of  $308,860,076.12,  the  funds  for  the 
payment  of  which  have  been  provided  from  the  current  earnings 
and  surplus  of  the  organization.  There  have  also  been  paid  off 
through  operation  of  the  bond  sinking  funds,  and  by  discharge 
upon  their  maturity,  $85,871,019.36  of  bonds,  mortgages,  and 
other  capital  obligations  which  were  outstanding  at  the  time  of 
organization  of  the  U.  S.  Steel  Corporation." 

The  statement  leaves  in  doubt  the  exact  meaning  of  the  expen- 
ditures for  extraordinary  replacements  and  betterments.  It  seems 
most  probable  that  such  expenditures  should  be  charged  off  to 
depreciation.  Making  this  deduction,  we  find  that  the  capital 
expenditures  have  been  $255,498,000  plus  the  cost  of  the  Union 
and  Clairton  Steel  Companies  and  the  Tennessee  Coal,  Iron  & 
Railroad  Company.  The  sum  total  of  which  appears  to  be  in 
the  neighborhood  of  $94,000,000.  A  round  figure  for  all  capital 
expenditures  since  the  organization  we  may  take  as  $350,000,000. 

On  the  assumption  that  these  expenditures  have  increased 


COST   OF   MINING   LAKE  SUPERIOR   IRON  113 

the  total  productive  capacity  of  the  concern  by  two-thirds,  it  is 
easy  to  deduce  the  conclusion  that  the  actual  capital  invested 
in  the  enterprises  at  the  beginning  of  the  organization  was  $525,- 
000,000,  and  that  at  present  the  total  invested  capital  can  be 
calculated  at  $875,000,000,  a  sum  which  may  be  compared  with 
the  total  obligation  of  the  company  in  preferred  stock  and  bonds 
of  the  corporation,  which  amount  in  par  value  to  $958,315,000. 

The  cash  surplus  of  the  corporation  is  kept  in  round  numbers 
at  $50,000,000,  the  remainder  of  the  surplus,  which  is  stated 
to  be  $133,000,000,  having  been  expended  on  the  various  plant 
investments.  The  working  capital  may  be  safely  assumed  to 
be  represented  by  the  inventories  which  were,  at  the  end  of  1908, 
$143,180,000  plus  the  cash,  making  a  total  sum  of  $193,000,000. 
Adding  this  to  the  foregoing  estimate  of  fixed  capital  investments, 
we  arrive  at  a  total  of  $1,068,000,000  as  the  actual  capital  em- 
ployed in  the  enterprise.  This  sum  plus  the  natural  enhance- 
ment of  the  value  of  its  properties  is  what  the  stockholders  of 
the  corporation  have  to  show  for  their  money. 

Analyzing  this  matter  a  little  further  we  find  that  the  obliga- 
tions in  the  preferred  stock  and  bonded  indebtedness  amount  to 
$958,000,000,  so  that  the  common  stock  represents  the  equiv- 
alent of  $110,000,000  invested  capital  plus  all  of  the  enhance- 
ment in  the  value  of  the  property  —  a  state  of  affairs  with  which 
the  stockholders  should  be  satisfied. 

The  following  table  shows  the  disposition  made  of  the  earn- 
ings of  the  company  since  the  beginning: 


114 


THE  COST   OF   MINING 


NET  PROFITS  AND  SURPLUS  OF  UNITED  STATES  STEEL  CORPORATION  AND 

SUBSIDIARY  COMPANIES  AT  CLOSE  OF  EACH  OF  THE  PERIODS  NAMED 
(Includes  only  Surplus  received  or  earned  on  or  subsequent  to  April  1,    1901) 


Period 

Net  Profits 
for  Period 
Available  for 
Dividends 

Surplus  at 
Close  of 
Period  before 
Declaration  of 
Dividends  1 

Dividends  on 
U.  S.  Steel 
Corporation 
Stock  for 
Respective 
Periods. 

Written  off 
Account  of 
Capital  Ex- 
penditures, for 
Special  Funds 
and  for  Sundry 
Adjustments 
and  Accounts 

Balance 
of 
Surplus 

Nine  months  ending  Dec. 
31,1901  
Year  ending  Dec.  3  1,1902 

QUARTER    ENDING 

March  31,  1093  
June  30,  1903  
September  30,  1903  .... 
December  31,  1903  

March  31,  1904  
June  30,  1904  
September  30,  1904  ... 
December  31,  1904  

March  31,  1905  .  . 
June  30   1905 

$60,600,109.05 
90,306,524.25 

14,891,989.64 
23,987,950.22 
19,684,774.49 
2,230,775.78 

4,606,593.70 
9,082,563.81 
7,617,906.85 

$85,600,109.05 
133,927,464.55 

92,766,586.69 
102,741,592.66 
109,816,596.23 
102,040,612.11 

68,099,358.51 
69,700,504,29 
73,831,323.75 

$41,979,168.75 
56,052,867.50 

14,012,944.25 
12,609,770.92 
10,006,759.90 
6,482,260.84 

6,304,919.25 
6,304,919.25 
6,304,919.25 
•  6,304,919.25 

6,304,919.25 
6,304,919.25 
6,304,919,25 
6,304,919.25 

8,846,431.75 
8,846,431.75 
8,846,431.75 
8,846,431.75 

8,846,431.75 
8,846,431.75 
8,846,431.75 
8,846,431.75 

8,846,431.75 
8,846,431.75 
8,846,431.75 
8,846,431.75 

$29,461,668.91 
9,708,124,50 

$43,620,940.30 
77,874,597.05 

78,753,642.44 
90,131,821.74 
99,809,836.33 
66,096,682.36 

61,794,439.26 
63,395,585.04 
67,526,404.50 
61,365,445.69 

10,143,836.95 

12,178,326.35 
16,875,599.99 
16,977,532.04 
22,653,287.55 

22,371,919.85 
24,536,025.28 
23,543,749.98 
27,767,393.02 

27,031,008.20 
30,843,512.61 

28,758,142.27 
18,614,416.20 

8,854,297.37 
9,042,027.55 
13,998,455.19 
13,739,899.00 

77,378,489.44 

71,826,602.51 
82,537,094.61 
90,322,263.92 
100,142,623.70 

102,570,244.10 
110,636,708.48 
118,444,038.26 
124,657,647.29 

118,256,429.88 
131,134,185.12 
140,376,218.82 
138,173,190.89 

127,092,583.20 
125,937,322.46 
137,506,368.22 
142,167,611.33 

3,300,000.00 
7,500,000.00 
6,500,000.00 
9,099,253.78 

10,500,000.00 
13,CCO,000.00 
11,000,000.00 
18,090,501.19 

14,500,000.00 
18,500,000.00 

62,221,683.28 
68,732,175.36 
77,517,344.67 
84,738,450.67 

83,223,812.35 
88,790,276.73 
98,597,606.51 
97,720,714.35 

94,909,998.13 
103,787,753.37 

September  30,  1905  
December  31  1905 

March  31  1906 

June  30,  1906  
September  30,  1906  .... 
December  31,  1906  

March  31,  1907  
June  30,  1907  
September  30,  1907  
December  31,  1907  

March  31  1908 

15,000,000.00 
6,681,515.52 

Cr.  94,034.59 

116,529,787.07 
122,645,243.62 

118,246,151.45 
117,090,890.71 
128,659,936.47 
133,415,214.17 

June  30,  1908  
September  30,  1908  
December  31,  1908  

1  Includes  Capital  Surplus  of  $25,000,000  provided  at  date  of  organization,  also  Undivided  Surplus 
of  Subsidiary  Companies  representing  accrued  profits  on  Inter-Company  materials  on  hand  in 
inventories. 


SUMMARY  —  APRIL  1,  1901,  TO  DECEMBER  31,  1908 


Capital  surplus  provided  at  date  of  organization 

Aggregate  net  profits  as  above 

Less,  amount  included  therein  representing 
accrued  profits  on  inter-company  ma- 
terials on  hand  in  inventories $10,371,803.25 

Net  charges  against  profits  made  at  close 
of  fiscal  years,  not  applicable  to  particu- 
lar quarters 7,119,665.15 

Reserved  for  fund  to  coyer  possible  failure 

to  realize  advanced  mining  royalties  . .  .       2,800,000.00 


$560,938,617.] 


$25,000,000.00 


20,291,468.40 


Balance  of  profits  earned . . 


Dividends  paid  on  U.  S.  Steel  Corporation  Stocks,  viz 

Preferred,  54J  per  cent 

Common,  15-j  per  cent 


540,647,148.79 
$565,647,148.79 


$218,975,274.66 
78,765,032.50 


297.740,307.16 
Leaving  a  surplus  of  . .  $267,906,841.63 


COST  OF  MINING  LAKE  SUPERIOR  IRON  115 

Brought  forward $267,906,841.63 

Of  the  foregoing  surplus  there  has  been  appropriated  for  payment  of  construction 
and  capital  expenditures  and  special  charges,  per  sixth  annual  report,  page  8  . .       162,827,364.16 

Balance  of  surplus  December  31,  1908,  exclusive  of  subsidiary  com- 
panies' inter-company  profits  in  inventories  $105,079,477.47 

Undivided  surplus  of  subsidiary  companies  on  December  31,  1908,  repre- 
senting profits  accrued  on  sales  of  materials  to  other  subsidiary  com- 
panies and  on  hand  in  latter's  inventories 28,335,736.70 

Total   $133,415,214.17 

It  seems  legitimate  to  make  the  following  comments  on  this 
statement : 

The  actual  profits  were  $540,647,000  derived  from  the  sale 
of  approximately  67,500,000  tons  of  finished  steel  products  and 
about  12,000,000  barrels  of  cement.  Let  us  figure  only  on  the 
tonnage  of  finished  iron  and  steel  products,  and  there  appears  a 
profit  of  $8  per  ton. 

Of  these  earnings  $297,740,000  has  been  paid  in  dividends  or 
approximately  $4.40  per  ton.  The  remaining  $242,000,000  has 
been  added  to  plant  or  used  to  increase  the  cash  surplus,  only 
$25,000,000  or  some  40  cents  a  ton  being  used  for  the  latter  pur- 
pose, the  remainder,  over  $217,000,000,  or  $3.20  per  ton,  being 
used  for  the  expansion  of  the  business.  Under  ordinary  circum- 
stances there  would  be  in  one's  mind  a  great  doubt  as  to  whether 
the  sum  thus  expended  for  plant  extensions  should  be  held  as  an 
addition  to  capital  or  whether  it  should  be  written  off  to  depre- 
ciation. But  in  this  remarkable  case  there  seems  to  be  no  doubt 
whatever  that  the  circumstances  justify  the  treatment  of  the 
whole  amount  as  a  true  capital  expenditure.  It  is  not  necessary 
to  dwell  on  this  point  further  than  to  point  out  that  the  expan- 
sion of  the  producing  capacity  of  the  concern  by  66  §  per  cent, 
shown  above  is  a  more  than  sufficient  justification.  We  are 
led  then  to  believe  that  the  profits  reported  by  the  company 
are  really  profits,  namely,  $8  per  ton,  and  that  this  is  over  and 
above  all  requirements  for  interest  on  bonds  and  building  up  of 
sinking  funds,  besides  depreciation.  This  means  that  the  sum 
of  nearly  $70,000,000  per  annum  has  been  earned  by  the  pre- 
ferred and  common  stock  of  the  corporation.  The  full  divi- 
dends of  7  per  cent,  a  year  have  been  paid  on  the  preferred  stock, 
absorbing  $219,000,000  l  in  the  seven  and  three-quarters  years. 

1  In  1903  the  preferred  stock  was  diminished  by  $150,000,000  by  con- 
version into  an  issue  of  bonds.  The  present  preferred  stock  amounts  to 
$360,281,100  on  which  the  annual  dividend  is  $25,215,672. 


116  THE  COST  OF  MINING 

SUMMARY  OF  MANUFACTURING  PLANTS  OWNED  BY  SUBSIDIARY  COMPANIES 


Blooming 

I 

Merchant 

o 

irnaces 

Bessemer 
Steel 
Works 

Open 
Hearth 
Steel 
Works 

Slabbing 
Billet 
and 
Sheet  Bar 

i 

Plate 
Mills 

Puddling 
Mills 

Skelp 
Mills 

Bar, 
Hoop 
and 

Cotton 

^ 

fn 

Mills 

rt 

Tie  Mills 

Name  of 

o 

•£ 

(A 

Operating  Company 

Total  Number 

Number  of  Bla 

<4_ 

% 

Number  of 
Works 

Num  ber  of 
Mills  in  Works 

Num  ber  of 
Works 

Number  of 
Puddling  Fees. 

Number  of 
Muck  Rolls 

Number  of 
Works 

Number  of 
Mills  in  Works 

Number  of 
Works 

Number  of 
Mills  in  Works 

Number  < 
Works 

Number  o 
Converten 

jj 

Number  o 
Furnaces 

Number  o 
Works 

Number  o 
Mills  in  Woi 

Carnegie  Steel  Co   . 

27 

51 

7 

16 

7 

98 

9 

26 

4 

3 

9 

- 

— 

— 

— 

- 

11 

46 

Illinois  Steel  Co  ... 

5 

21 

2 

6 

2 

24 

2 

7 

2 

1 

3 

_ 

_ 



2 

8 

Indiana  Steel  Co. 

(Gary)  

1 

4 

— 

— 

2 

28 

1 

2 

1 

— 

— 

— 

— 

— 



— 

— 

— 

The    Lorain    Steel 

Pn 

Am.  Steel  and  Wire 

Co     

29 

12 

2 

4 

3 

17 

3 

5 

1 

3 

2 

6 

National  and  other 

Tube  Cos  

13 

11 

3 

7 

' 

~ 

3 

5 

1 

2 

76 

2 

10 

35 

1 

3 

Am.  Sheet  and  Tin 

Plate  Co  

36 

— 

— 

— 

1 

10 

3 

5 

— 

— 

— 

1 

4 

— 

— 

— 

— 

~" 

American     Bridge 

Co  

17 

— 

— 

— 

1 

11 

1 

1 

— 

— 

— 

— 

— 

— 

— 

— 

1 

1 

Union  Steel  Co    ... 

2 

5 

— 



2 

24 

2 

4 

— 

1 

1 

— 

— 

— 

— 

— 

— 

— 

Clairton  Steel  Co  .  . 

1 

3 

— 

— 

1 

12 

1 

2 

— 

— 

— 

— 

— 

— 

— 

— 

1 

1 

Tennessee  C.,  I.  & 

R.R.  Co  

6 

16 

— 

2 

1 

6 

1 

1 

1 

1 

1 

— 

— 

— 

— 

— 

1 

2 

Universal    Portland 

Grand  Total 

142 

123 

14 

35 

20 

230 

26 

58 

9 

7 

17 

3 

80 

2 

10 

35 

19 

67 

COST  OF  MINING   LAKE  SUPERIOR  IRON 
OF  UNITED  STATES  STEEL  CORPORATION 


117 


Struc- 

Sheet Mills 

tural 
Shape 

Rod 
Mills 

Wire  Mills 

Black  Plate  Mills 
and 

Pipe 

Mills 

1* 

a 

Mills 

Tin  Plate  Mills 

-|?J 

§ 

PQ  — 

b 

Miscellaneous 

Number  of 
Works 

Number  of 
Mills  in  Works 

Number  of 
Works 

Number  of  Rod 
Mills  in  Works 

Number  of 
Works 

Number  of 
Nail  Factories 

Barbed  Wire  & 
Fence  Factories 

2% 

C'N 
|| 

Departments 
for  Tinning 

Number  of 
Works 

Number  of  Hot 
Mills  in  Works 

Departments 
for  Tinning 

£  £ 

C    N 

|i 

Number  of 
Works 

Number  of 
Fces-in  Works 

Number  of 
Structur; 

Number  ol 

Works 

1-Axle  Works. 

1-  Armor  Plant. 

2-Bolt     and     Rivet 

Depts. 

1-Splice  Bar  Shop. 
1-Warehouse       and 

Shop. 

1-Forge  Dept. 

1-Spike,     Bolt    and 
Nut  Factory 

1-Paint  Factory. 

1-Splice  Bar  Shop. 

2 

1-Frog   and    Switch 

Works. 

7-Sulphate   of   Iron 

Plants. 

1-Horse  Shoe  Works 

3-Spring  Works. 
1-Electrical  Works. 





12 

17 

21 

12 

11 

16 

7 

— 

— 

—  - 

— 

—  • 

— 

5 

I  4-Wire  Rope  Works 
•    4-Cold       Rolling 

Depts. 

1-Shafting  Dept. 
2-Zinc      Smelting 

Works. 

3-Galvanizing 

Works. 

Job  Works. 
1-Thread   Protector 

L      Works. 

f  1-Sulphuric    Acid 





— 

—  . 

— 

— 

— 

— 

— 

35 

41 

17 

5 

— 

.  —  . 

— 

2 

Plant. 

1-Sulphate   of   Iron 

0 

.      Plant. 

1-Eye  Bar  Works. 

— 

— 

2 

4 

2 

2 

2 

2 

— 

2 

34 

1 

— 

— 

_ 

— 



2-Sulphate   of   Iron 

Plants. 

0 

6 

52 

20 

30 

14 

15 

24 

23 

14 

13 

18 

7 

37 

449 

ig 

5 

11 

51-Miscellaneous 

Works. 

118  THE'  COST  OF  MINING 

The  remainder,  $321,000,000,  has  all  gone  to  the  benefit  of 
the  common  stock  and  has  been  used  to  pay  dividends  to  the 
amount  of  $78,765,000,  and  the  building  up  of  equities  to  the 
amount  of  some  $242,000,000. 

It  is  probably  true  that  at  the  beginning  the  common  stock 
represented  little  or  nothing  more  than  a  speculative  possibility. 
But  the  success  of  the  company  during  the  last  eight  years  has 
created  most  substantial  values  for  it.  It  must  be  remembered 
that  the  great  constructive  enterprises  of  the  corporation  have 
as  yet  yielded  little  return.  That  is  for  the  future.  If  we  cal- 
culate that  the  probabilities  of  the  future  contain  nothing  more 
than  a  realization  on  the  expansion  already  accomplished,  the 
earning  powers  of  the  concern  seem  fairly  prodigious.  If  it  has 
now  reached  a  point  where  it  can  pay  out  as  dividends  the  earn- 
ings on  a  product  equal  only  to  the  average  of  the  last  eight  years, 
without  counting  on  any  increased  product,  we  find  that  the 
earnings  available  for  dividends  are  equal  to  $45,000,000  a  year 
on  the  common  stock,  approximately  9  per  cent.  There  are  only 
two  grounds  for  doubting  that  this  will  be  realized,  namely,  that 
the  prices  and  costs  of  the  future  may  not  be  the  same  as  in  the 
past,  and  that  the  management  may  deteriorate.  How  far 
these  elements  may  weaken  the  position  of  the  corporation  only 
the  future  can  tell.  But  its  record  to  date,  and  especially  for 
the  past  five  years,  makes  it  a  conservative  statement  that  this 
concern  is  the  greatest  and  promises  to  be  one  of  the  most  profit- 
able enterprises  that  the  world  has  ever  seen. 

IRON    ORE    MINES 

Developed   Iron   Ore  Mines  Owned   by   Subsidiary   Companies, 
December  31,   1908 

IN  THE  LAKE  SUPERIOR  ORE  REGION 

Marquette  Range  Marquette  Range  (Con't)   Menominee  Range  (Con't) 

Hartford  Mine.                     Winthrop  Mine.1  Hilltop  Mine.1 

Queen  Mine  (|  int.).            Champion  Mine.  Chapin  Mine. 

Section  16  Mine  (|  int.).  Aragon  Mine. 

Section  21  Mine  (f  int.).  Menominee  Range  Cundy  Mine.1 

Hard  Ore  Mine  (|  int.).      Mansfield  Mine.  Iron  Ridge  Mine.1 

Hematite  Mine  (f  int.).       Michigan  Mine.  Pewabic  Mine  (^  int.). 
Moore  Mine.1                       Riverton  Mine. 
Stegmiller  Mine.                  Cuff  Mine.1 

1  Inactive  at  present  time. 


COST  OF  MINING   LAKE  SUPERIOR   IRON 


119 


IRON  ORE  MINES  — Continued 


Gogebic  Range 
Norrie  Mine. 
Aurora  Mine. 
Chicago  Mine.1 
Tilden  Mine. 
Atlantic  Mine. 
Puritan  Mine. 
Davis  Mine. 

Vermilion  Range 
Pioneer  Mine. 
Savoy  Mine. 
Sibley  Mine. 
Zenith  Mine. 
Soudan  Mine. 

Mesabi  Range 

Mountain  Iron  Mine. 
Stephens  Mine.1 
Virginia  Mine. 


Mesabi  Range  (Con't) 
Fayal  Mine. 
Auburn  Mine.1 
Genoa  Mine.1 
Chisholm  Mine. 
Sauntry  Mine.1 
Clark  Mine. 
Adams  Mine. 
Burt  Mine. 
Day  Mine.1 
Duluth  Mine. 
Glen  Mine. 
Hull  Mine. 
Hull-Rust  Mine. 
Leonard  Mine. 
Pillsbury  Mine. 
Rust  Mine. 
St.  Clair  Mine.1 
Sellers  Mine. 
Winifred  Mine. 


Mesabi  Range  (Con't) 
Spruce  Mine. 
Monroe  Mine. 
Tener  Mine. 
Myers  Mine. 
Morris  Mine. 
Donora  Mine.1 
Sharon  Mine.1 
Penobscot  Mine.1 
Higgins  Mine. 
Union  Mine  (^  int.).1 
Biwabik  Mine  (^  int.). 
Mahoning  Mine  (i  int.). 
Hartley  Mine. 
Gilbert  Mine. 
McKinley  Mine. 
Canisteo  Mine. 
Walker  Mine. 
Holman  Mine. 
Hill  Mine. 


IN    THE    SOUTHERN    ORE    REGION 

Red  Mountain  Range  (Near  Birmingham,  Ala.}. 

Muscoda  Group :  5  active  and  1  inactive  mine  openings. 
Fossil  Group:  4  active  mine  openings. 
Ishkooda  Group:  4  active  mine  openings. 
Green  Springs :  1  inactive  mine  opening. 

Alabama  Brown  Ore  Pockets  (At  Greeley,  Ala.*). 
Greeley  Group:  3  active  mine  openings. 
Champion  Group:  1  active  mine  opening. 

Georgia  Brown  Ore  Pockets  (At  Bartow,  Ga.}. 

Bartow  Group:  2  inactive  mine  openings. 

In  addition  to  the  foregoing  mines,  the  subsidiary  companies  own  in  fee 
and  hold  under  long  term  leases  in  the  regions  named,  extensive  acreages  of 
mineral  and  timber  lands,  containing  large  quantities  of  ore  yet  unopened, 
and  on  which  there  are  substantial  tracts  of  standing  timber  designed  for 
future  use  in  mining  operations. 

1  Inactive  at  present  time. 


120 


THE  COST  OF  MINING 


COAL  AND  COKE  PROPERTIES  OWNED  BY  SUBSIDIARY  COMPANIES 
DECEMBER  31,   1908 


NORTHERN  COAL  AND  COKE  PROPERTIES 

ACREAGE  OF  COAL 
PROPERTY 

COKE  PLANTS 

Coal  Plants  Not 
Connected  with 
Coke  Plants  H 

Coking 
Coal 

Steam 
Coal 

Sur- 
face 

01 

^ 

No. 
Bee- 
Hive 
Ovens 

No.  By 
Prod- 
uct 
Ovens 

Connellsville  Region. 
In  Westmoreland  and  Fayette  Counties,  Pa.: 
Property  owned  

58,513 
1,457 

65,357 

25,207 
3,0(59 

3,168 
140 

3,831 

21,353 
36 

793 

696 
90 

64 

8 

1 
1 
1 
1 

20,696 
2,151 

212 
25 
120 
280 

2 
4 

4 

6 

Property  leased  

Pocahontas  Region. 
In  McDowell  County,  West  Virginia: 
Property  owned  

Steam  Coal     Properties. 
In  Washington,   Allegheny,  Green,  Somerset 
and  Mercer  Counties,  Pa.: 
Property  owned  
Property  leased  

Sundry  small  coal  tracts  located  at  or  near  mill 
plants    in    Ohio,   Pennsylvania    and    West 
Virginia: 

Property  leased       .... 

In  Sullivan  County,  Indiana,  and  Williamson 
County,  Illinois  —  Owned  

By-Product  Coke  Plants  Located  at  Blast  Furnace 
Plants. 
So.  Sharon,  Pa  

Benwood,  W.  Va  
Joliet,  Illinois  

Total  Northern  Coal  and  Coke  Property.  .  . 

125,327 

36,015 

22,968 

76 

22,847 

637 

16 

SOUTHERN  COAL  AND  COKE  PROPERTY 

(Tennessee  Coal,  Iron  &  R.  R.  Co.) 
Acreage  of  Coal  Territory,  viz.: 

Mineral  interests  only  —  Owned  . 151,408  acres 

Mineral  interests  and  surface  —  Owned 176,376  acres 

Surface  only  —  Owned   7,912  acres 

On  the  above  property  are  located  6  coal  mining  plants  operating  23 
mines  and  producing  coal  for  both  sale  and  for  manufacture  of  coke.  There 
are  in  connection  with  these  coal  mining  operations  11  coal  washing  plants 
and  6  coking  plants,  which  latter  embrace  2,664  bee-hive  coke  ovens  and  240 
by-product  coke  ovens. 

MISCELLANEOUS  PROPERTIES  O\VNED  BY  SUBSIDIARY  COMPANIES 

DECEMBER  31,  1908 
WATER  SUPPLY  PLANTS: 

In  the  Connellsville  coke  region  are  located  various  water  supply  plants, 
consisting  of  eleven  reservoirs  and  six  pumping  stations  with  a  distributing 


COST  OF  MINING   LAKE  SUPERIOR   IRON  121 

system  of  pipe  lines  aggregating  about  90  miles  in  length.  These  plants  have 
a  capacity  of  18,000,000  gallons  of  water  per  day,  furnishing  water  for  use 
in  manufacturing  coke,  and  in  addition,  providing  the  water  supply  for  three 
municipalities. 

NATURAL  GAS  PROPERTY: 

The  Carnegie  Natural  Gas  Company  has  in  Pennsylvania  and  West 
Virginia  extensive  natural  gas  territory,  either  owning  or  having  under  lease 
about  180,449  acres;  owning  550  miles  of  pipe  lines,  five  pumping  stations 
and  309  active  wells. 

Extensive  natural  gas  territory  and  pipe  lines  are  controlled  and  owned 
by  the  American  Sheet  and  Tin  Plate  Company  in  Pennsylvania,  it  having 
under  lease  about  43,538  acres;  owning  one  large  and  four  smaller  pumping 
stations  and  151  active  wells. 

ORE  DOCKS: 

Large  forwarding  ore  docks  situated  on  Lake  Superior  are  owned  as  follows: 
At  Two  Harbors,  Minn.,  owned  by  Duluth  &  Iron  Range  R.R.  Company 

6  docks. 
At  Duluth,  Minn.,  owned  by  Duluth,  Missabe  &  Northern  Ry.  Company, 

4  docks. 

Receiving  ore  docks  are  owned  at  the  furnace  plants  at  Chicago,  111. ;  Mil- 
waukee, Wis. ;  Lorain,  Ohio,  and  Cleveland,  Ohio. 

Receiving  and  forwarding  docks  are  owned  at  Lake  Erie  ports  as  follows: 
At  Conneaut,  Ohio,  by  Pittsburg  and  Conneaut  Dock  Company. 
At  Ashtabula,  Ohio,  by  Carnegie  Steel  Company. 
At  Fairport,  Ohio,  by  Pennsylvania  and  Lake  Erie  Dock  Company. 


CHAPTER   VII 

OCCURRENCE   AND   PRODUCTION   OF  COPPER 

OCCURRENCE     AND     PRODUCTION  OF  COPPER 

The  commercial  copper  minerals  —  World's  production  —  Growth  of  cop- 
per production  in  the  United  States  —  Various  districts  of  the  United 
States  —  Production  from  various  kinds  of  ore  —  The  plants  required  — 
Generalization  on  the  cost  of  plants  required  for  copper  mining. 

WHILE  it  is  no  part  of  the  plan  of  this  volume  to  discuss  the 
geological  or  mineralogical  occurrence  of  ores,  convenience  seems 
to  demand  for  the  reader  some  general  statement  that  will  show 
where  copper  comes  from  and  how  it  is  obtained.  Some  refer- 
ence to  geological  conditions  will  be  found  in  following  chapters 
illustrating  the  economic  problems  encountered  at  the  various 
mines;  so  that  no  further  description  will  be  attempted  here. 
The  entire  output  of  the  mines  to  be  discussed  here  is  derived 
from  the  following  minerals: 

Per  Cent. 
Copper 

Cupriferous  pyrite 0.5  to  4 

Richer  copper  sulphides — Chalcopyrite 34.4 

Bornite 55.58 

Chalcocite       79.7 

Oxides  and  carbonates  — Red  oxide   88.8 

Black  oxide 79.8 

Azurite 61.4 

Malachite 63.8 

Silicate  —  Chrysacolla 

Native  copper 100 

These  various  ores  are  apt  to  be  found  derived  from  an  orig- 
inal mineralization  of  cupriferous  pyrite  which  is  simply  iron  sul- 
phide containing  a  small  proportion  of  copper.  The  effects  of 
the  circulation  of  surface  waters  on  such  ores  has  resulted  in  an 
extensive  and  often  profound  rearrangement  of  the  minerals. 
In  general  terms  this  is  the  origin  of  most  commercially  valuable 
copper  deposits.  There  are,  however,  some  very  important 
exceptions.  The  native  copper  ores  of  Lake  Superior  have  not 
been  proved  to  have  any  connection  with  any  original  sulphide. 
The  new  porphyry  deposits  of  Utah,  Nevada,  Arizona,  and 
Mexico  have  no  denned  connection  with  solid  masses  of  pyrite, 

122 


OCCURRENCE  AND   PRODUCTION   OF  COPPER 


123 


although  they  are  undoubtedly  secondary  sulphides.  Except 
in  the  case  of  cupriferous  pyrite,  which  sometimes  occurs  in  very 
large  homogenous  masses  with  little  admixture  of  foreign  sub- 
stances, commercial  copper  is  invariably  a  mixture  of  the  true 
ore  with  a  large  proportion  of  country  rock  or  other  minerals, 
technically  known  as  "  gangue." 

WORLD'S  PRODUCTION 

The  smelter  production  of  copper  in  the  world  was  1,589,- 
809,300  Ib.  in  1907;  in  1906  the  production  was  1,596,973,700  lb., 
and  in  1905  it  was  about  1,545,137,000  lb.  In  1907  the  smelter 
output  of  the  United  States  was  54.66  per  cent,  of  the  world's 
total  production,  in  1906  it  was  57.47  per  cent.,  and  in  1905  it 
was  about  57.52  per  cent. 

If  we  add  the  production  of  Canada  and  Mexico,  where  the 
mines  have  almost  invariably  some  connection  with  those  in  the 
United  States,  we  get  the  total  output  of  North  America;  which 
was,  for  1906,  69.8  per  cent.,  and  in  1907,  66.4  per  cent.,  of  the 
world's  product. 

WORLD'S  PRODUCTION  (SMELTER  OUTPUT)  OF  COPPER  IN  1906  AND  1907,  IN 

POUNDS 


1906 

1907 

Algeria  

985,600 

156,800 

Argentina    
Australasia 

235,200 
81,200000 

492,800 
92  400  000 

Austria  

2,744,000 

2,060,800 

Bolivia  
Canada                                   .        

5,600,000 
57,030,400 

5,600,000 
57  377  600 

Cape  Colony 

8  825  600 

9  475  200 

Chile  

57,668,800 

59,774,400 

England  
Germany                                    .    .  . 

1,120,000 
45,561,600 

1,568,000 
45  897  600 

Hungary 

470  400 

280  000 

Italy  

6,417,600 

7,392,000 

Japan  
Mexico   
Namaqualand 

95,737,600 
135,800,000 
5  824  000 

109,614,400 
126,705,600 
5  600  000 

Newfoundland    
Norway    
Peru 

5,140,800 
13,708,800 
19,051,200 

3,875,200 
16,702,400 
23  688  000 

Russia    . 

23,497,600 

33.600.000 

124 


THE  COST  OF  MINING 


WORLD'S  PRODUCTION  (SMELTER  OUTPUT)  OP  COPPER  IN  1906  AND  1907,  IN 
POUNDS  —  Continued 


1906 

1907 

Spain 

105  055  200 

111  272  000 

Portugal  

5,421,600 

1 

Sweden  

1,120,000 

4,480,000 

Turkey 

952  000 

2  800  000 

United  States  

917,805,700 

868,996,500 

Total    . 

1.596.973.700 

1.589.809.300 

The  following  table  shows  the  growth  of  the  American  copper 
industry  from  its  beginning  to  the  end  of  1908: 

MAGNITUDE  AND  GROWTH  OF  COPPER  PRODUCTION  IN  THE  UNITED  STATES 
FROM  1845  TO  1908,  INCLUSIVE 


Year 

PRODUCTION 

INCREASE 

AVERAGE  ANNUAL  INCREASE 
BY  DECADES 

Pounds 

Pounds 

Per  Cent. 

Pounds 

Per  Cent. 

1845  

224,000 









1846  

336,000 

112,000 

50.0 

1847  
1848  

672,000 
1,122,000 

336,000 
450,000 

100.0 
67.0 

242,400  i/ 

50.0 

1849  

1,568,000 

426,000 

40.0 

1850  

1,456,000 

(a)  112,000 

(a)  7.1 

1851  

2,016,000 

560,000 

23.1 

1852  

2,464,000 

448,000 

22.2 

1853  

4,480,000 

2,016,000 

81.8 

1854  

4,990,000 

510,000 

12.5 

1855  
1856  

6,720,000 
8,960,000 

1,730,000 
2,240,000 

33.3 
33.3 

l,467,200y 

27.0 

1857  

10,752,000 

1,792,000 

20.0 

1858  

12,320,000 

1,568,000 

14.6 

1859  

14,112,000 

1,792,000 

14.5 

1860  

16,128,000 

2,016,000 

14.3 

1861  

16,800,000 

672,000 

4.1 

j 

1862  

21,160,000 

4,360,000 

20.0 

1863  

19,040,000 

(a)  2,  120,000 

(a)  5.5 

1864  

17,920,000 

(a)  1,120,000 

(a)  5.9 

1865  

19,040,000 
19,936,000 

1,120,000 
896,000 

6.3 
4.7 

1,209,600  j 

6.1 

1866  

1867  

22,400,000 

2,464,000 

12.3 

1868  

25,984,000 

3,584,000 

16.0 

1869  

28,000,000 

2,016,000 

7.7 

1870  .  . 

28.224.000 

224.000 

1.0 

(a)  Decrease. 


OCCURRENCE  AND   PRODUCTION   OF  COPPER 


125 


MAGNITUDE  AND  GROWTH  OF  COPPER  PRODUCTION  IN  THE  UNITED  STATES 
FROM  1845  TO  1908,  INCLUSIVE  —  Continued 


Year 

PRODUCTION 

INCREASE 

AVERAGE  ANNUAL  INCREASE 
BY  DECADES 

Pounds 

Pounds 

Per  Cent. 

Pounds 

Per  Cent. 

1871  

29,120,000 

896,000 

3.2 

1872 

28,000,000 

(a)  1,120,000 

(a)  3.8 

1873 

34,720,000 

6,720,000 

24.0 

1874  

39,200,000 

4,480,000 

12.9 

1875  
1876 

40,320,000 
42,560,000 

1,120,000 
2,240,000 

2.9 
5.6 

3,225,600 

7.2 

1877  

47,040,000 

4,480,000 

10.5 

1878  

48,160,000 

1,120,000 

2.4 

1879 

51,520,000 

3,360,000 

7.0 

1880  

60,480,000 

8,960,000 

17.4 

1881 

71,680,000 

11,200,000 

18.6 

j 

1882  

90,646,232 

8,966,232 

12.5 

1883  

115,526,053 

24,886,221 

27.4 

1884 

144,946,653 

29,420,600 

25.5 

1885  
1886  

165,875,766 
156,735,381 

20,929,113 
(a)  9,  140,385 

144 
(a)  5.5 

18,930,349 

14.8 

1887  

180,920,524 

24,185,143 

15.4 

1888  

226,361,466 

45,440,942 

25.1 

1889  

226,775,962 

414,496 

.2 

1890  

259,763,092 

32,987,130 

14.5 

1891  

284,121,764 

24,358,672 

9.4 

1892  

344,998,679 

60,876,915 

21.5 

1893  

329,354,398 

(a)  15,644,281 

(a)  4.8 

1894  

354,188,374 

24,833,976 

7.5 

1895  
1896  

380,613,404 
460,061,430 

26,425,030 
79,448,026 

7.4 
20.9 

34,635,407 

9.1 

1897  

494,078,274 

34,016,844 

7.4 

1898  

526,512,987 

32,434,713 

6.6 

1899  

568,666,921 

42,153,934 

8.0 

1900  

606,117,166 

37,450,245 

6.6 

1901  

602,072,519 

(a)  4,044,647 

(a)  .7 

1 

1902  

659,508,644 

57,436,125 

9.5 

1903  

698,044,517 

38,535,873 

5.8 

1904 

812,537,267 

114,492,750 

16.4 

37  554  189 

7 

1905 

888,784,267 

76,247,000 

9.4 

1906  

917,805,682 

29,021,415 

3.3 

1907  

868,996,491 

(a)  48,809,191 

(a)  5.3 

1908  .  .  . 

948,196,490 

80,800,000 

8.5 

J 

(a)  Decrease. 


126 


THE  COST  OF  MINING 


SUMMARY 


Years 

Total  Production 

AVERAGE  ANNUAL  INCREASE 

Quantity 

Per  Cent. 

1845-1907                        

Pounds 

12,163,637,913 

Pounds 

13,880,213 
2,034,333 
30,282,201 

15.0 

17.2 

9.9 

1846-1907  

1846-1881  

1882-1907  .  . 

In  the  following  table  is  given  for  1907  the  production  of  all 
districts  in  the  United  States  whose  output  yielded,  on  smelting, 
2,000,000  Ib.  or  more: 

COPPER  PRODUCTION  OF  PRINCIPAL  DISTRICTS  IN  1907,  IN  POUNDS 


District  or  Region 

State 

Approximate 
Smelter  Output 

Percentage 
of  Total 
Production 

Rank 

Butte  
Lake  Superior  
Bisbee 

Montana  
Michigan  
Arizona 

222,000,000 
219,000,000 
110000000 

25.55 
25.20 
12.66 

1 
2 
3 

Morenci 

Arizona  

63,000,000 

7.25 

4 

Bingham  

Utah  

.  .  47,000,000 

5.41 

5 

Globe  

Arizona  

35,000,000 

4.03 

6 

Jerome 

Arizona  

33,000,000 

3.80 

7 

Shasta  County  
Ducktown 

California  
Tennessee  

28,000,000 
19,500,000 

3.22 
2.24 

8 
9 

Tintic  
Coeur  d'Alene  
Leadville  

Utah  
Idaho  
Colorado  

7,800,000 
6,600,000 
5,700,000 

.90 
.76 
.66 

10 
11 
12 

Silverbell  
Southeastern  Alaska 

Arizona  
Alaska  

5,600,000 
5,400,000 

.64 

.62 

13 
14 

Santa  Rita  
Frisco  .  .  . 

New  Mexico  .... 
Utah  

5,000,000 
4,900,000 

.58 
.56 

15 

16 

Calaveras  County  
Encampment  
White  Knob  
San  Juan  
Lucin  
Burro  Mountain  

California  
Wyoming  
Idaho  
Colorado  
Utah  
New  Mexico  .... 

4,500,000 
2,900,000 
2,800,000 
2,600,000 
2,200,000 
2,100,000 

.52 
.33 
.32 
.30 
.25 
.24 

17 
18 
19 
20 
21 
22 

Total  
All  others 

834,600,000 
34,400,000 

96.04 
3.96 

— 

Grand  Total 

/ 

869,000,000 





OCCURRENCE  AND  PRODUCTION   OF  COPPER  127 

In  the  following  chapters  something  will  be  found  regarding 
the  conditions  and  results  in  Butte,  Lake  Superior,  Bisbee,  Mo- 
renci,  Bingham,  Globe,  Shasta  County,  and  Ducktown  districts 
that  account  for  86  per  cent,  of  production  in  the  United  States. 

An  interesting  view  of  the  broad  features  of  the  copper  min- 
ing business  may  be  had  from  the  following  table,  which  shows 
that  of  all  the  ores  treated  in  the  United  States  one-quarter  are 
smelted  direct  and  three-quarters  concentrated.  The  concen- 
trated ores  are  reduced  to  12.4  per  cent,  of  their  volume  before 
smelting.  Adding  this  to  the  amount  smelted  crude  we  find  the 
total  percentage  smelted  to  be  34.7  per  cent.  The  average  cop- 
per yield  of  all  ores  mined  was  41.2  Ib.  per  ton  or  2.06  per  cent. 
The  yield  from  ores  smelted  direct  was  80.1  Ib.  per  ton  or  4.05 
per  cent.  The  yield  per  ton  of  concentrating  ore  was  28.2  Ib. 
per  ton  or  1.41  per  cent.;  while  the  resulting  concentrates  yielded 
247  Ib.  per  ton  or  12.35  per  cent. 

A  rough  estimate  of  the  plants  required  to  perform  the  pro- 
cesses indicated  is  as  follows : 

Mining,  milling,  and  smelting  plants  with  trans- 
portation facilities  between  mines,  mills,  and 
smelters,  at  $4.50  per  ton  of  annual  capacity 
for  15,000,000  tons  of  concentrating  ore  $67,500,000 

Mining  and  smelting  plants  for  5,000,000  tons 
smelting  ore  at  $7  per  ton  of  annual  capac- 
ity    $35,000,000 

Total  plant  required    $102,500,000 

This  estimate  is  intended  to  cover  only  such  transportation 
lines  as  are  owned  by  mining  companies,  not  the  longer  lines 
owned  by  railroad  companies  that  are  used  to  carry  ores,  concen- 
trates, matte,  or  bullion  for  great  distances. 

The  various  refineries  will  probably  bring  up  the  capital  in 
plants  by  an  additional  $7,500,000,  making  a  total  plant  em- 
ployed in  the  copper-mining  business  of  at  least  $110,000,000. 
This  estimate  refers  only  to  the  successful  and  active  plants. 
The  addition  of  failures  and  discarded  plants  would  undoubtedly 
show  a  largely  increased  figure.  Computing  the  future  life  or 
the  average  mine  at  fifteen  years,  the  amortization  of  capital 
is  10  per  cent.  To  this  we  must  add  6  per  cent,  for  annual  depre- 
ciation, so  that  a  total  charge  of  16  per  cent,  must  be  made  for 
the  use  of  capital.  On  $110,000,000  this  annual  charge  is 
$17,600,000,  or  a  little  over  2  cents  a  pound  on  the  output  of  1907. 


128 


THE  COST  OF  MINING 


If  the  average  operating  cost  of  production  is  10  cents,  the  addi- 
tion of  plant  charges  will  therefore  bring  the  total  cost  up  to 
12  cents  a  pound. 

TONNAGE  OF  DOMESTIC  COPPER-BEARING  MATERIAL  TREATED  IN  1907, 
IN  SHORT  TONS 


TONNAGE  SMELTED 
YIELDING  COPPER 

COPPER-BEARING  ORE 
SOLD  OR  TREATED 

BY  THE  MlNES 

Source 

Pounds  Copper  per  Ton 

Copper- 

All  Ore  Mined 

Crude 
Smelting 
Ore 

Concen- 
trates 

Copper  Ore 

iead  and 
Copper- 
lead  - 

zinc  Ore 

Alaska 

90,849 

98,927 

71.2  Alaska 

Arizona  

1,768,256 

247,073 

3,191,125 

1,608 

80.5  Arizona 

California 

417,005 

273 

339,152 

40 

84.1  California 

Colorado  

263,314 

65,547 

22,619 

7,841 

258.    Colorado 

Idaho  

83,801 

683 

136,327 

80.    Idaho 

Michigan  

172,000 

9,892,214 

— 

22.    Michigan 

Montana  

590,827 

1,246,160 

3,719,600 

28,295 

60.    Montana 

Nevada 

83,750 

291 

11,100 

31,077 

—     Nevada 

New  Mexico  

81,013 

4,250 

164,849 

66     New  Mexico 

North  Carolina  .... 

7,865 

328 

11,261 

— 

•    North    Caro- 

lina 

Oregon      

6,518 

298 

7,060 

— 

Oregon 

Tennessee  

557,950 

— 

558,487 

— 

35.7  Tennessee 

Utah    

1,061,708 

121,042 

1,793,084 

2,920 

36.    Utah 

Washington    

17,317 

7 

14,691 

— 

Wyoming    

(a)  17,000 

(a)  1,000 

(a)  26,071 

— 

90     Wyoming 

Alabama,     Georgia, 

Maryland,       Mis- 

souri,  Vermont, 

Virginia,  and  un- 

apportioned    .... 

4,369 

2,720 

52,917 

— 

Total  

5,107,542 

1,862,665 

20,039,484 

71,781 

41.2  Average 

Grand  Total   

6,970,207 

20,111,265 

1 

(a)  Partly  estimated. 

Figuring  on  costs  per  ton  in  a  general  way,  assuming  the  cost 
per  pound  to  be  12  cents  complete,  we  have: 
For  smelting  ores  80.1  X  12  =  $9.61  per  ton. 
For  concentrating  ores  28.2  X  12  =  3.38  per  ton. 


CHAPTER   VIII 
LAKE   SUPERIOR   AMYGDALOID   COPPER   MINES 

General  working  conditions  in  the  region  —  Plants  required  and  their  cost 

—  Milling,   transportation,  and   smelting  —  Cost   of  smelting  —  Nature 
of  the  deposits  —  Wolverine  mine  —  Mohawk  mine  —  Atlantic  mine  — 
Osceola    Consolidated  —  Quincy    Mining    Company  —  Baltic    Lode  — 
Sorting  and  filling  at  Copper  Range  —  Baltic  mine  —  Trimountain  mine 

—  Champion  mine. 

THE  Lake  Superior  copper  mines  work  deposits  of  native 
metal  occurring  either  in  beds  of  conglomerate  or  in  amygda- 
loids,  which  mark  the  upward  surface  of  ancient  lava  flows.  The 
deposits  in  these  beds  form  immense  ore  shoots  of  dimensions 
in  one  case  as  great  as  three  miles  in  length  and  over  a  mile  in 
width  in  the  plane  of  the  vein,  covering  many  hundred  acres. 
Such  a  lateral  extent,  combined  with  a  thickness  of  from  6  to  30  ft., 
gives  a  volume  of  many  million  tons  of  workable  material. 

The  persistence  and  extent  of  the  deposits  have  long  estab- 
lished that  the  controlling  factor  in  the  successful  exploitation 
of  these  mines  is  the  provision  of  machinery  for  handling  large 
quantities  of  material  for  long  periods  of  time.  The  practice  of 
the  last  ten  years  has  fixed  a  cost  of  about  $1,500,000  as  necessary 
for  the  preliminary  development  and  equipment  of  a  property 
on  a  scale  commensurate  with  economy.  The  actual  working  of 
the  deposits  is  simple.  The  mines  are  dry  and  safe;  the  ores  of 
each  deposit  are  uniform  in  character  and  can  be  concentrated 
easily  and  cheaply;  the  smelting  operations  a,re  reduced  to  a  mini- 
mum, the  concentrates  to  be  smelted -ranging  from  1  to  4|  per 
cent,  of  the  ore  milled.  Wages  are  very  moderate,  being  about 
25  cents  an  hour;  supplies  of  all  kinds  are  cheap;  the  country  in 
the  neighborhood  of  the  mines  is  well  watered  and  well  timbered; 
transportation  to  and  from  markets  is  done  mainly  by  water,  and 

129 


130 


THE    COST    OF    MINING 


is  very  cheap.  The  population  is  vigorous  and  intelligent,  al- 
though at  least  95  per  cent,  of  the  men  employed  in  the  mines 
are  of  foreign  birth,  the  greater  number  being  Finns,  Englishmen, 
Austrians,  and  Italians. 


Redrawn  from  Map  by  R.  M.  Edwards.  Honghtcm.  Mlct 

FIG.  5 

It  may  be  said,  therefore,  that  not  a  single  factor  in  the  work- 
ing of  the  mines  is  unfavorable.  The  inclination  of  the  deposits 
is  from  35°  to  70°,  so  that  in  following  the  ore  shoots  the  shafts 
become  enormously  deep,  several  of  them  being  in  the  neighbor- 
hood of  a  mile  vertically  below  the  surface.  This  means,  of 
course,  an  unusual  expense  for  hoisting  and  increasing  difficulty 


LAKE  SUPERIOR  AMYGDALOID   COPPER  MINES  131 

in  working  as  compared  with  mining  at  ordinary  depths,  but  it 
indicates  the  extremely  favorable  conditions  prevailing  in  this 
district  by  showing  the  remarkable  persistence  of  the  orebodies. 
Under  present  conditions  the  total  cost  of  mining  these  ores 
and  marketing  the  copper  is  from  $2  to  $3  per  ton. 

The  ore  hoisted  at  the  various  mines  is  shipped  to  mills  on 
the  shore  of  Lake  Superior  or  its  bays.  The  distance  is  usually 
from  10  to  20  miles.  The  mills  concentrate  the  copper  into 
"mineral"  containing  about  70  per  cent,  metal.  This  mineral 
is  then  smelted  at  plants  situated  along  the  shores  of  Portage 
lake,  an  inlet  of  Lake  Superior.  The  smelting  and  refining  are 
done  by  a  single  process;  and  ingot  copper  is  produced  that  needs 
no  further  refining,  the  copper  being  exceptionally  pure  and 
commanding  a  higher  price  than  any  other  in  the  market. 

PLANTS  REQUIRED  AND  THEIR  COST 

To  elaborate  a  little  on  the  business  aspects  of  the  process 
of  obtaining  the  copper  we  may  group  the  plants  required  as 
follows : 

1.  The  mining  plants  for  hoisting,  pumping,  compressing  air, 
crushing,  etc.  —  These  plants  are  always  owned  by  the  mining 
companies  themselves.     Unfortunately  I  am  not  able  to  get  the 
cost  of  these  plants,  segregated  from  other  plant  charges,  in  a 
single  instance. 

2.  The  transportation  of  ore  to  the  mills.  —  This  is  invariably 
done  by  railroad.     The  Copper  Range  Company  had  to  provide 
this  equipment  for  three  mines  which  in  1906  had  reached  an 
output  of  1,828,000  tons  and  are  likely  to  average  2,000,000  tons 
a  year.     The  cost  of  the  Copper  Range  Railroad  was,  including 
working  capital  and  equipment,  $6,500,000.     This  road  serves  a 
number  of  other  mines  and  a  considerable  territory  outside  the 
Copper  Range  group.     Nevertheless  it  seems  fair  to  charge  half 
of  it  to  those  mines,  so  that  we  may  figure  $1.60  per  annual  ton 
for  their  transportation  capital. 

3.  The  concentrating  mills.  —  The  cost  of  these  is  invariably 
bound  up  with  that  of  the  mine  equipment  and  development. 
We  may  as  well  stop  to  consider  1  and  3  together: 

The  Copper  Range  Mines  had  to  raise  the  following  sums  for 
development  and  mine  and  mill  equipment  before  they  became 
self-sustaining. 


132  THE  COST  OF  MINING 

Baltic $800,000 

Trimountain  1,200,000 

Champion   1,475,000 

Total    $3,475,000 

for  an  annual  output  of  say  2,000,000  tons,  equal  to  a  plant 
charge  of  $1.75  per  ton  of  ore  stamped  annually. 

The  Wolverine  Mine  paid  for  its  mining  and  milling  plants 
and  development,  if  I  understand  the  report  correctly,  $780,000; 
providing  capacity  for  mining  and  milling  350,000  tons  a  year, 
equal  to  $2.20  per  annual  ton. 

The  Mohawk  Mining  Company  spent  $1,350,000  to  provide 
itself  with  mining  milling  facilities  for  an  output  of  675,000  tons, 
equal  to  $2.00  per  annual  ton.  Its  Traverse  Bay  Railroad  went 
in  with  the  mine  itself,  apparently,  at  a  valuation  of  $450,000, 
or  about  70  cents  per  annual  ton. 

Returning  to  the  Copper  Range  and  adding  together  the  initial 
cost  of  railroad  and  mining  plants  we  get  a  total  of  $6,800,000 
or  $3.40  per  annual  ton. 

4.  The  smelting  plants  for  converting  the  concentrates  or  min- 
eral into  ingot  copper.  —  These  plants  are  usually  owned  by 
groups  of  mines  in  common.  The  Michigan  Smelting  Company, 
with  works  capable  of  turning  out  90,000,000  Ib.  refined  cop^ 
per  a  year,  which  represents  the  yield  of  about  4,500,000  tons 
of  ore  from  the  mines,  is  capitalized  at  $500,000,  probably  its 
cost.  This  is  equal  to  only  11  cents  per  ton  of  rock  mined. 

Companies  •  that  have  complete  mining,  milling,  transpor- 
tation, and  smelting  facilities  of  their  own  are  the  Quincy 
and  Calumet  &  Hecla.  The  former  states  that  its  total  cost  for 
plant,  including  railroads,  warehouses,  real  estate,  smelting, 
mining,  and  milling  plants  is  $6,300,000.  The  annual  tonnage 
stamped  is  not  given,  but  is  approximately  $1,100,000,  giving  a 
total  plant  cost  of  nearly  $6  per  annual  ton.  The  Calumet  & 
Hecla  gives  the  complete  cost  of  all  its  plants  at  between  fifteen 
and  sixteen  million  dollars,  with  an  annual  output  of  2,500,000 
tons,  equal  to  $6  +  per  annual  ton. 

In  round  numbers,  I  think  we  may  say  that  the  minimum 
plant  cost  per  annual  ton  is  $3  for  the  most  favorably  situated 
amygdaloid  mine  and  $6  for  a  conglomerate  mine.  In  each 
case  the  working  is  conducted  on  a  grand  scale. 


LAKE  SUPERIOR  AMYGDALOID   COPPER  MINES          133 

While  the  Michigan  mines  are  all  remarkably  long  lived  it 
does  not  seem  proper  to  reckon  on  anything  less  than  a  7  per 
cent,  annual  instalment  to  cover  the  amortization  of  capital  so 
invested.  The  corollary  is  that  the  use  of  capital  is  worth  from 
21  to  42  cents  per  ton  of  output,  or  at  the  very  least  1  cent  per 
pound  of  copper. 

COST  OF  SMELTING 

Professor  L.  S.  Austin  reports  (Mining  and  Scientific  Press, 
April  24,  1909)  the  costs  of  the  Lake  Superior  Smelting  Company 
for  1906  as  follows: 

41,177  tons  "mineral"  (concentrates)  producing  55,526,088  pounds  fine 

copper. 

Per  Ton 

Concentrates 

Reverberatory  operating    $195,144  $4.741 

Miscellaneous   43,409  1.055 

Construction 15,665  0.380 

Blast-furnace  operating    32,623  0.790 

Miscellaneous   13,461  0.327 


Total    $300,302          $7.293 

Dividing  the  total  cost  by  the  pounds  of  copper  we  get  0.541 
cents  as  the  cost  of  smelting  per  pound. 

It  appears  that  to  this  must  be  added  about  J  cent  per  pound 
for  freight  for  market  and  marketing  expense,  so  that  the  total 
cost  for  smelting,  refining,  and  marketing  is  a  little  over  1  cent 
per  pound  refined  copper. 

NATURE  OF  THE  DEPOSITS 

While  in  a  broad  sense  the  conditions  are  .rather  uniform 
throughout  the  district,  there  are  three  fairly  well  marked  types 
of  deposits  whose  characteristics  impose  certain  differences  of 
method  and  cost.  One  is  the  conglomerate,  of  which  the  only 
commercially  valuable  deposit  is  the  great  ore  shoot  worked  by 
the  Calumet  &  Hecla  and  the  Tamarack  mines.  This  has  already 
produced  in  the  neighborhood  of  1,100,000  tons  of  fine  copper 
from  more  than  40,000,000  tons  of  ore,  and  there  remains  in 
sight  probably  20,000,000  tons  more.  This  magnificent  orebody 
is  about  14  feet  thick;  it  dips  at  an  angle  of  37°,  and  is  a  hard 
compact  bed  of  conglomerate  overlaid  by  a  trap  hanging  wall  of 
such  a  character  that  it  requires  timbering. 


134  THE  COST  OF  MINING 

The  amygdaloid  deposits  are  rather  numerous  and  have 
much  in  common.  There  is,  however,  an  important  distinction 
between  that  of  the  Copper  Range  Consolidated  Company  and 
the  other  amygdaloid  mines.  The  ordinary  amygdaloids  (rep- 
resented by  the  Wolverine  on  the  Kearsarge  lode  and  by  the 
Quincy  mine)  either  are,  or  are  assumed  to  be,  homogenous, 
in  that  all  of  the  vein  stuff  is  sent  to  the  mill  with  a  very  mod- 
erate amount  of  sorting  at  the  surface.  These  deposits  have 
yielded  from  a  minimum  of  12  Ib.  to  a  maximum  of  50  Ib.  of  cop- 
per to  the  ton.  The  rock  is  softer  than  the  conglomerate,  and 
is  more  easily  milled.  The  hanging  wall  is  generally  firm,  so 
that  in  most  cases  mining  can  be  done  without  any  timbering. 

The  amygdaloid  of  the  Copper  Range  Consolidated  Company 
on  the  Baltic  lode  is  somewhat  different.  The  rock  is  harder 
than  the  ordinary  and  the  copper  is  very  apt  to  be  attached  to 
numerous  small  fissures  that  traverse  the  bed.  The  result  of 
this  distribution  of  value  has  been  the  development  of  an  entirely 
distinct  type  of  underground  mining,  based  on  a  system  of  sort- 
ing waste  out  of  the  vein  itself  and  leaving  this  waste  in  the  stopes 
for  filling. 

THE  WOLVERINE  MINE 

Of  these  various  types  the  simplest  is  the  kind  of  amygdaloid 
mine  represented  by  the  Wolverine.  This  property  in  common 
with  all  others  of  the  Stanton  group  is  very  well  managed  and 
issues  clear  and  excellent  reports.  The  entire  process  of  mining 
and  realizing  copper  at  this  mine  is  simple.  The  vein  averages 
about  15  ft.  thick.  It  dips  at  an  angle  of  about  37°;  no  timber- 
ing whatever  is  required,  but  a  few  small  pillars  are  left.  The 
shafts  are  sunk  mainly  in  the  vein  itself,  but  partly  in  the  foot- 
wall  a  few  feet  back  from  the  vein.  Levels  are  run  at  distances 
of  100  ft.  and  are  opened  by  what  are  called  "stope  drifts/'  these 
being  a  complete  section  of  the  vein  25  ft.  wide  along  the  plane  of 
the  footwall.  The  cost  of  running  these  drifts  is  $5.68  per  foot 
in  excess  of  the  cost  of  stoping  an  equivalent  amount  of  ground. 

In  the  stopes  themselves,  nothing  is  done  except  to  break 
the  ore  with  machines.  Once  broken  the  ore  is  caught  on  a  low 
platform  built  at  the  bottom  of  the  stope  from  which  the  ore  is 
partly  rolled  and  partly  shoveled  into  the  cars.  This  completes 
the  mining  process.  The  cost  of  the  underground  work  is  less 


LAKE  SUPERIOR  AMYGDALOID   COPPER  MINES          135 

than  $1  a  ton;  7  cents  a  ton  is  added  for  crushing  and  sorting  in 
the  rock  house  at  the  suface.  Transportation  to  the  mill  costs 
about  16  cents  a  ton  and  concentration  about  22  cents.  General 
expenses  such  as  superintendence,  taxes,  and  insurance,  etc., 
amount  to  about  22  cents  more;  and  smelting,  refining,  and 
marketing  about  29  cents,  making  a  total  of  operating  expenses 
of  $1.84.  Construction  work  for  the  last  four  years  has  averaged 
8  cents,  and  the  total  expenses  with  construction  for  the  same 
period  have  averaged  $1.92. 

It  is  to  be  noticed  that  in  this  mine  the  exploration  work  is 
reduced  nearly  to  zero.  The  whole  operation  is  a  straight,  un- 
complicated matter  of  handling  so  much  material;  and  to  the 
handling  of  it  nature  has  interposed  as  few  obstacles  as  can  be 
found  in  any  underground  mine.  There  is  very  little  water  to 
pump;  there  are  no  complex  vein  systems  to  work  out,  no  faults 
to  interrupt  the  vein,  and  no  geological  relations  to  be  under- 
stood. There  is  always  abundant  room  to  work,  good  ventilation, 
comparatively  soft  ground,  and  no  timbering.  While  it  cannot 
be  denied  that  the  Wolverine  is  a  well-managed  property  which 
has  kept  notably  clear  from  extravagant  impractical  projects  of 
all  kinds,  it  seems  fair  to  say  that  the  low  costs  obtained  by  it  are 
not  in  any  way  extraordinary,  but  merely  the  inevitable  result  of 
common-sense  methods  applied  to  a  favorable  set  of  conditions. 

The  accompanying  table  gives  such  details  as  are  published 
of  the  cost  of  mining  in  the  Wolverine.  It  is  to  be  noticed  that 
the  Wolverine  is  at  present  the  richest  of  all  amygdaloid  mines 
and  that  for  this  reason  the  cost  for  smelting  is  higher  than  that 
of  any  of  the  other  mines  of  its  class. 

WORKING  EXPENSES  AT  THE  WOLVERINE  MINE,  YEAR  ENDING  JUNE  30,  1907 
UNDERGROUND  EXPENSES  (Rock  Stamped  344,062  Tons)  —  Per  Ton 

Sinking  450  ft.  at  $17.88    $8,046.00 

Drifting  4,993  ft.  at  $5.68    28,385.80 

Stoping  23,175  fathoms  at  $7.69 178,269.70 

Labor  . .  1,546.55 


$216,248.05 

Timbering 5,286.60 

Tramming 71,603.15 

Mining  captains  and  labor 29,151.80 

Mechanics 7,833.15 

Hoisting  and  pumping 22,092.51 

Carried  forward $352,215.26 


136 


THE  COST  OF  MINING 


WORKING  EXPENSES  AT  THE  WOLVERINE  MINE,  YEAR  ENDING  JUNE  30,  1907 

—  Continued  Per  Ton 

Brought  forward $352,215.26 

Compressor 29,774.52 

Teaming,  etc 1,095.95 

Supplies  and  fuel  19,107.47 

Electric  light 291.88 

$402,584.98 
Less  profit  on  supplies  furnished  contractors 65,416.00 

$337,168.98     $0.98 
ROCK  HOUSE  — 

Labor $13,371.85 

Machinists 1,166.28 

Fuel 2,160.00 

Supplies 3,621.29 

Teaming,  etc 808.30 

Electric  light 1,167.12 

22,294.84       0.065 

STAMP  MILL  — 

Transportation $55,053.35 

Supplies  and  electric  light    9,918.72 

Machinists 4,318.90 

Fuel  and  teaming 26,816.00 

Labor 27,632.80 

Pumping 7,599.78 

131,339.55-      0.38 

SURFACE  AND  INCIDENTAL  EXPENSES  — 

Superintendence  and  labor $20,309.57 

Supplies 9,523.51 

Telephone,  telegrams,  and  sundries 495.28 

Taxes  and  insurance 48,938.14 

Freight  on  mineral,  etc 5,948.28 


Less  amounts  received  for  rents 


Construction  average  of  four  years 

Amortization  of  $780,000  at  5  per  cent, 
interest  and  3  per  cent,  annual  amorti- 
zation   

Smelting,  refining,  and  marketing 


$85,215.18 
6,547.90 


78,667.28       0.223 


$569,470.65 


$1.648 
0.08 


0.20 
0.284 

$2.212 


Total    

Average  cost  of  copper  in  New  York,  7.93  cents  per  pound. 

The  amortization  in  this  case  includes  the  purchase  price  of  the  prop- 
erty.    This  item  is  not  distinguished  from  the  capital  invested  in  equipment. 


LAKE  SUPERIOR  AMYGDALOID  COPPER  MINES 


137 


STATEMENT  OF  RECEIPTS  AND  EXPENDITURES  OF  THE  WOLVERINE  COPPER 
MINING  COMPANY  FROM  DATE  OF  ORGANIZATION  TO  JUNE  30,  1908 


From   capital  stock  (60,000  shares  at  $10  per 

share),  paid  in  at  organization    $600,000.00 

From  assessments    180,000.00 

From  proceeds  of  copper  (87,146,014  Ibs.)  ....  12,534,015.91 

From  interest 80,916.41 

$13,394,932.32 

Expenditures 

Cost  per  Pound 

For  real  estate,  land,  buildings, 
machinery,  dwellings,  etc.,  at 
organization  .  . .  $550,000.00  $0.65 

For  lands  since  purchased    181,819.23  0.2 

For  mining  and  surface  labor,  im- 
provements, costs  of  smelting 
and  marketing  copper,  and  all 
incidental  expenses  7,051,483.87  8.05 

7,783,303.10  =  8.9  cents. 

Receipts  over  expenditures $5,611,629.22 

Deduct  dividends  paid,  Nos.  1  to  20  inclusive  .  .      4,800,000.00 

Balance  of  receipts  over  expenditures $811,629.22 

STATEMENT  OF  WORKING  EXPENSES  AT  THE  WTOLVERINE  MINE  FOR  YEAR 
ENDING  JUNE  30,  1908 

Underground  Expenses  per  Ton 

Sinking  414  feet  at  $18.20    $7,536.50 

Drifting  4,841.1  feet  at  $5.58 27,024.20 

Stoping  23,817.3  fathoms  at  $7.76    184,951.75 

Labor 887.40 

$220,399.85 

Timbering  6,935.15 

Tramming 65,016.55 

Mining  captains  and  labor 30,354.10 

Mechanics 8,689.43 

Hoisting  and  pumping    32,312.98 

Compressor • 30,278.69 

Teaming,  etc 2,561.90 

Supplies  and  fuel   20,559.38 

Electric  light 437.87 

$417,545.90 
Less  profit  on  supplies  furnished  contractors    66,621.00 


Carried  forward $350,924.90      $1.01 


138  THE  COST  OF  MINING 

STATEMENT  OF  WORKING  EXPENSES  AT  THE  WOLVERINE  MINE  FOR  YEAR 
ENDING  JUNE  30,    1908  —  Continued 

Cost 

Rock  House  B^gj 

Brought  forward $350,924.90  $1.00 

Labor $13,293.55 

Machinists 1,564.44 

Fuel 2,343.00 

Supplies 1,654.25 

Teaming,  etc 952.18 

Electric  light 1,321.16 

21.128.58  .06 

Stamp  Mill 

Transportation $52,923.45 

Supplies  and  electric  light    ...  11,372.06 

Machinists 7,555.47 

Fuel  and  teaming    30,199.81 

Labor 30,669.90 

Pumping   9,261.29 

141,981.98  .40 

Surface  and  Incidental  Expenses 

Superintendence,  and  labor.  .  .   $21,606.41 

Supplies 8,300.22 

Telephones,     telegrams,     and 

sundries 505.87 

Taxes  and  insurance   53,794.59 

Freight  on  mineral,  etc 5,454.14 

$89,661.23 
Less  amount  received  for  rents      6,790.50 

82,870.73  .24 


Total  working  expenses    $596,906.19     $1.71 

Summary  of  Results,  1908 

Rock  hoisted      367,795  tons 

Rock  stamped     348,860  tons 

Product  of  mineral      12,117,000  pounds 

Product  of  refined  copper     9,356,123  pounds 

Yield  of  rock  26.82  Ib.  per  ton  treated    1.341  per  cent. 

Cost  per  ton  of  rock  hoisted  $1.62 

Cost  per  ton  of  rock  stamped     1.71 

Cost  per  pound  of  refined  copper  at  mine    6.379  cents 

Cost  of  smelting,  freight,  and  marketing  product,  inclu- 
ding New  York  office  expenses 942  cents 

Total  cost  per  pound  of  refined  copper    7.321  cents 


LAKE  SUPERIOR  AMYGDALOID   COPPER  MINES  139 

THE  MOHAWK  MINING  COMPANY 

This  is  one  of  the  newer  and  lower  grade  amygdaloid 
mines.  It  is  situated  northeast  of  Calumet  on  the  Kearsarge 
lode,  the  same  one  on  which  the  Wolverine  is  situated.  This 
lode  is  one  of  the  longest  and  most  persistent  veins  in  the 
world.  It  is  considered  to  be  payable  for  a  length  of  ten 
miles.  The  values,  however,  are  not  evenly  distributed  through 
it.  Certain  portions  are  quite  unpayable  while  others  are 
very  good.  The  poor  spots  are  believed  to  form  irregular 
patches,  alternating  irregularly  with  the  richer  portions.  This 
fact  makes  necessary  a  large  amount  of  preliminary  develop- 
ment to  open  up  enough  ground  to  insure  a  steady  output  of 
pay  rock. 

The  Mohawk,  like  the  Wolverine,  is  under  the  Stanton  manage- 
ment, and  the  reports  to  stockholders  are  all  that  can  be  desired. 
The  essential  facts  will,  I  believe,  all  appear  from  the  following 
statements : 

CURRENT  COSTS,  MOHAWK  MINING  COMPANY,  1906 

Rock  hoisted 703,771  tons 

Rock  stamped    618,543  tons 

Product  refined  copper  9,352,252  Ib. 

Yield  per  ton  stamped    15.12  Ib. 

COSTS  PER  TON  STAMPED  —  Per  Ton 

Underground  expense  $578,817    $0.93 

Surface  expense 56,463       0.09 

Rock  house  expense    45,327      0.07 

Transportation  to  mill .  83,952      0.14 

Stamping 120,152      0.19 


Total    $884,712    $1.42 

Smelting  refining,  and  marketing  17.65  Ib.  per  ton 0.18 

Construction,  average  four  years  (charged  to  additional  output  of 
5,000,000  tons  in  20  years),  5  per  cent,  interest,  3  per  cent,  amorti- 
zation charged  on  output  of  10,000,000  tons 0.10 

Amortization  of  $1,350,000  invested  in  plant  on  10,000,000  tons  to  be 

mined  in  26  years,  5  per  cent,  interest,  2  per  cent,  amortization  .  .      0.25 

Total  cost  of  mining  10,000,000  tons $1.95 

Cost  of  refined  copper  in  New  York  11.05  cents  per  pound. 


140 


THE  COST   OF  MINING 


MOHAWK  MINE  —  STATEMENT  OF  RECEIPTS  AND  EXPENDITURES  FROM  DATE 
OF  ORGANIZATION  TO  DECEMBER  31,  1908 


Receipts 


Capital  Stock  issued  for  purchase 
Capital  Stock  issued  for  cash  . . . 
On  account  of  Assessment  No.  1 
On  account  of  Assessment  No.  2 
On  account  of  Assessment  No.  3 
On  account  of  Assessment  No.  4 

Sales  of  "Mohawkite"    

Sales  of  copper,       226,824  Ib.  at 
Sales  of  copper,    6,284,327  Ib.  at 


of  Mine  .  , 


$450,000.00 

300,000.00 

250,000.00 

300,000.00 

299,994.00 

199,996.00 

116,407.79 
26,425.91 
823,940.81 

1,058,382.25 

1,457,588.20 

1,832,765.96 

1,583,083.66 

1,382,731.05 

18,160.68 

Total  copper,  53,803,669 $10,099,476.31 


Sales  of  copper, 
Sales  of  copper, 


8,149,515  Ib.  at 
9,387,614  Ib.  at 


Sales  of  copper,  9,352,252  Ib.  at 
Sales  of  copper,  10,107,266  Ib.  at 
Sales  of  copper,  10,295,881  Ib.  at 
Balance  of  interest  account 


—  $2.50  per  share 

—  $3.00  per  share 

—  $3.00  per  share 

—  $2.00  per  share 

11.65  cents  (1902) 
13.11  cents  (1903) 
12.99  cents  (1904) 
15.53  cents  (1905) 
19.60  cents  (1906) 

15.66  cents  (1907) 
13.43  cents  (1908) 


Expenditures 

Real  estate  (Mine  location  and 

Traverse  Bay  R.  R.) $450,000.001 

Real  estate  (land  since  purchased).  30,251. 92 J 

Net  expenditure  for  mining  opera- 
tions, equipment,  taxes,  and 

incidentals 7,384,624.51 

$7,864,876.43 


Cost  per 
Pound 

0.9  cents 


13.7 

14.6  cents 


Dividends 


January  10,  1906.. 
July  10,  1906  .... 
January  10,  1907.  . 
July  10,  1907  .... 
July  10,  1908  .... 


$200,000.00 
300,000.00 
400,000.00 
500,000.00 
250,000.00 


1,650,000.00 


9,514,876.43 
Balance  of  receipts  over  expenditures $584,599.88 


LAKE  SUPERIOR  AMYGDALOID   COPPER  MINES 


141 


STATEMENT  OF  WORKING  EXPENSES  AT  THE  MOHAWK  MINE  FOR  THE  YEAR 

1908 

Cost 

Underground  Expense  Summed 

Mining  contracts    $302,659.43 

Mining  on  company  account    65,606.30 

Timbering,  tramming,  and  labor 170,453.00 

Hoisting  and  pumping    32,998.36 

Power  drills 52,653.11 

Supplies  and  electric  light .  36,222.98 

$660,593.18     $0.96 

Surface  Expense 

Superintendence    and    labor,    less    sundry 

credit  items $27,627.13 

Supplies  and  materials   9,073.99 

Sundry  expenses    . 2,281.22 

Freight  on  mineral,  barrels,  etc 5,641.74 

Fire  insurance 6,800.26 

Taxes 24,434.95 

Legal  expenses 300.00 

Telegrams  and  telephone    203.74 

$76,363.03 

Less  amount  received  for  rents 13,524.15 

62,838.88      0.09 

Rock  House  Expense 

Labor $38,019.68 

Supplies  and  teaming    6,988.62 

Fuel 3,000.00 

Electric  light 1,080.00 

49,088.30      0.07 

Transportation  Expense 

Freight  on  rock    $78,869.75 

Labor 3,312.84 

Supplies,  etc 550.00 

82,732.59       0.12 


Carried  forward $855,252.95     $1.24 


142  THE  COST   OF  MINING 

STATEMENT  OF  WORKING  EXPENSES  AT  THE  MOHAWK  MINE  FOR  THE  YEAR 

1908  —  Continued 

Cost 

Stamping  Expense  Stamped 

Brought  forward $855,252.95     $1.24 

Labor $57,562.93 

Fuel 44,660.80 

Pumping  cost 19,862.75 

Electric  light  and  teaming 2,316.59 

Supplies 19,346.86 


$143,749.93 

Less  received  for  custom  work    10,037.25 

—       133,712.68       0.20 


Total  working  expenses    $988,965.63 

Construction 21,796.11       0.03 


Total  expense  at  mine $1,010,761.74     $1.47 

Summary  of  Results 

Rock  hoisted 789,694  tons 

Rock  stamped 685,823  tons 

Product  of  mineral 13,310,820  Ib. 

Product  of  refined  copper 10,295,881  Ib. 

Yield  of  rock  treated,  15.01  Ib.  per  ton,  or    7505  per  cent. 

Cost  per  ton  of  rock  hoisted  $1.252 

Cost  per  ton  of  rock  stamped     $1.442 

Cost  per  pound  of  refined  copper  at  mine 9.605  cents 

Cost  of  smelting,  freight,  and  marketing  product, 

including  office  expenses 938  cents 

Total  cost  per  pound  of  refined  copper    10.543  cents 

Total  cost  per  pound  of  refined  copper,  including  construction,    10.755  cents 

ATLANTIC  MINE 

This  property  has  frequently  been  referred  to  as  the  best 
example  of  close  management  and  low  costs  in  the  Lake  Superior 
copper  district.  The  original  amygdaloid  mine  seems  to  have 
been  finally  abandoned  as  probably  unpayable,  but  the  com- 
pany has  other  property  of  prospective  value.  The  last  year 
for  which  reports  in  the  characteristic  manner  were  issued,  and 
which  shows  the  results  obtained  by  the  property  to  that  date, 
is  for  1904.  The  following  is  the  summary.  It  is  a  model  of 
what  a  report  to  stockholders  ought  to  be: 


LAKE  SUPERIOR  AMYGDALOID  COPPER  MINES 


143 


SUMMARY  OF  RECEIPTS  AND  EXPENDITURES  OF  ATLANTIC  MINING  COMPANY, 
FROM  DATE  OF  ORGANIZATION  TO  DECEMBER  31,  1904 

Receipts 

Capital  Stock  paid  by  consolidation $700,000.00 

Capital  Stock  paid  by  assessments 280,000.00 

$980,000.00 
Sales  of  copper 15,512,930.86 

Other  sources 853.15 

I  

$16,493,784.01 

Expenditures 

Real  estate  ("South  Pewabic"and  "Adams" 
mines,  buildings,  railroad,  stamps,  etc.,  as 
valued  at  consolidation) $659.642.11 

Real  estate  (land  since  purchased)    20,349.66 

$679,991.77 

Net  expenditure  for  additional  equipment, 
mining  operations,  smelting  and  marketing 

copper,  taxes,  and  incidentals 14,523,445.03 

—      15,203,436.80 

Balance  of  receipts,  being  net  profits  to  date $1,290,347.21 

Deduct  dividends  paid    940,000.00 

Net  surplus,  December  31,  1904    $350,347.21 

STATEMENT  OF  WORKING  EXPENSES  BY  THE  ATLANTIC  MINE  FOR  THE  YEAR 
ENDING  DECEMBER  31,  1904 


Underground  Expenses 

Sinking  shafts  182  feet,  average  $22.74  net .  $4,138.89 

Sinking  forks  6  feet,  average  $21.87  net    ..  131.24 

Drifting  (8'xlO')  4,910  ft.,  average  $7.86  net  39,073.22 

Stoping  22,009  fathoms,  average  $4.42  net .  97,332.82 

Timbering,  tramming,  and  labor 118,592.96 

Timber,  materials,  and  supplies 27,423.43 

Pumping  and  operating  air  compressors: 

Labor 12,916.58 

Fuel 14,868.00 

Supplies  and  materials   3,981.10 


Cost 
per  Ton 
Stamped 


Carried  forward $318,458.24     $0.82 


144 


THE  COST   OF   MINING 


STATEMENT  OF  WORKING  EXPENSES  BY  THE  ATLANTIC  MINE  FOR  THE  YEAR 
ENDING  DECEMBER  31,  1904  —  Continued 


Cost 


Surface  Expenses 


Brought  forward  ................................     $318.458.24     $0.82 

Superintendence  and  labor  of  all  kinds,  less 

sundry  credit  items  ..................  $35,487.61 

Supplies  and  materials    .................  15,867.64 

Fuel  ..........................  ........  22,937.71 

Fire  insurance  .........................  558.75 

Taxes  ................................  6,592.02 

Expenses  and  sundry  repairs  ............  5,022.25 

Electric  lighting  and  wiring  .............  2,590,31 

$89,056.29 
Less  amount  received  for  rents  ..........         8,410.45 

80,645.84       0.21 

Railroad  Expenses 

Labor  ................................     $24,270.95 

Fuel  ..................................         9,020.00 

Supplies  ..............................         6,496.83 

$39,787.78 
Less  amount  received  for  freight  .........         9,637.30 

30,150.48       0.08 

Stamp  Mill  Expenses 

Labor  .............................  ...  $40,766.74 

Fuel  .................................  54,913.81 

Supplies  ..............................  16,909.19 

Fire  insurance  .........................  2,047.31 

Transporting  mineral,  etc  ................  3,6*74.57 

$118,311.62 
Less  received  for  custom  work    ........  .  .        14,292.60 

104,019.02       0.26 

Total  working  expenses    ..............  $533,273.58 

Construction  Account 
AT  MILL. 

1  "  Huntington"  mill    ................       $3,549.66 

1  Engine  for  dynamo    ................          1,679.34 

5,229.00       0.01 


Total  expenditure  at  mine 


$538,502.58     $1.38 


LAKE  SUPERIOR  AMYGDALOID   COPPER  MINES          145 


Summary  of  Results 

Ground  broken  in  openings  and  stoped 24,165  fathoms 

Rock  stamped 390,526  tons 

Product  of  mineral 7,149,640  Ib. 

Product  of  refined  copper 5,321,859  Ib. 

Yield  of  refined  copper  per  cubic  fathom  of  ground  broken  .  .  .  220  Ib. 

Yield  of  rock  treated,  13.63  Ib.  per  ton,  or    0.681  per  cent. 

Gross  value  of  product,  per  ton  of  rock  treated   $1.8185 

Cost  per  ton  of  mining,  selecting,  and  breaking,  and  all  surface 

expenses,  including  taxes 1.0220 

Cost  per  ton  of  transportation  to  mill    .0772 

Cost  per  ton  of  stamping  and  separating .2663 

Cost  per  ton  of  working  expenses  at  mine 1.3655 

Cost  per  ton  of  freight,  smelting,  and  marketing  product,  inclu- 
ding New  York  office  expenses .1684 

Cost  per  ton  of  running  expenses 1.5339 

Total  expenditure  (including  construction)  per  ton  of  rock  treated  1 .5484 

The  Osceola  Cons.  Mining  Company  works  some  large  amygda- 
loid mines  near  the  Calumet  &  Hecla. 

ABSTRACT  OF  THE  REPORTS  OF  THE  OSCEOLA  MINING  Co. 
The  following  table  gives  the  comparative  results  for  1906,  1907  and  1908. 


1906 

1907 

1908 

Tons  rock  stamped 

1  016  240 

811  603 

1  241  400 

Pounds  mineral  obtained  
Percentage    refined    copper    in 
mineral 

24,227,281 
76725 

18,607,747 
75  962 

26,912,944 
78  Q61 

Pounds  refined  copper  per  ton 
of  rock  stamped    
Product  fine  copper    
Cost  per  pound  at  mine,  exclu- 
din0"  construction 

18.3 
18,588,451  Ib. 

8  73  cents 

17.4 
14,134,753  Ib. 

10  59  cents 

17.1 
21,250,794  Ib. 

8  74  cents 

Cost  per  pound  construction  .  . 
Cost   per   pound    of   smelting, 
freights,     eastern     expenses, 
commissions,    and    all    other 
charges  

0.84  cents 
1.32  cents 

0.60  cents 
1.25  cents 

0.69  cents 
1.10  cents 

Total  cost  per  pound  of  refined 
copper 

10  89  cents 

\1  44  cents 

10  53  cents 

Cost  of  mining  and   stamping 
per  ton  of  rock  stamped    .  .  . 
Gross  cost  of  stamping  per  ton  . 
Net  cost  of  stamping  per  ton 
after  deducting  profit  on  cus- 
tom rock  . 

$1.60 
16.39  cents 

13.83  cents 

$1.84 
17.47  cents 

11.71  cents 

$1.50 
15.78  cents 

13.34  cents 

146  THE  COST  OF  MINING 

From  the  above,  it  appears  that  the  total  costs  per  ton  for 
1908  were  $1.80  as  compared  with  $2.16  in  1907,  and  $1.99  in 
1906.  This  rise  and  fall  of  cost  was  an  experience  the  com- 
pany shared  with  nearly  all  other  mining  companies  during  this 
period. 

The  reports  state  that  the  old  Osceola  mine  shows  large 
reserves  of  copper  towards  the  south  end,  the  northerly  shafts 
being  more  nearly  worked  out.  At  the  North  Kearsarge  mine 
No.  1  shaft  was  damaged  by  fire  in  September,  1906,  and 
repaired  at  a  cost  of  $36,950.  This  was  charged  to  operating 
expenses.  The  report  contains  little  additional  information'  of 
interest. 

The  total  dividends  to  date  are  $7,612,550.  Dividends  since 
the  beginning  of  1901  have  been  $3,942,150  from  an  output  of 
136,584,911  lb.,  equal  to  a  trifle  less  than  3  cents  a  pound. 
Lake  copper  in  the^same  period  averaged  15.57  cents  in  price. 
It  appears  from  this  that  the  copper  has  averaged  some  12.5 
cents  in  cost,  including  everything. 

The  company  has  been  absorbed  by  the  Calumet  &  Hecla. 

QUINCY'  MINING  COMPANY 

Next  to  the  Calumet  &  Hecla  the  Quincy  mine  with  its  record 
of  $18,450,000  paid  in  dividends,  from  a  total  capital  investment 
of  $2,150,000,  has  been  the  best  copper  mine  in  the  Lake  region. 
Its  career  is  tersely  expressed  in  the  following  statement  issued 
annually  in  its  report  to  the  stockholders. 

In  1908  its  record  was  as  follows: 

Refined  copper,  20,600,361  pounds  Per  Pound 

Cost  of  mining  and  milling $1,980,867               9.61  cents. 

Smelting,  transportation,  etc 175,081                 .85 

Taxes  47,909                 .24 

Construction 104,604                .51 

Total    $2,308,461  11.21  cents. 

The  Quincy  is  an  amygdaloid  mine.  It  works  a  vein  some 
10  to  15  ft.  thick.  In  persistence  and  general  character  it  is 
a  fine  example  of  that  kind  of  deposit.  It  is  now  about  5,300 
feet  deep  on  the  incline.  The  yield  per  ton  is  not  given,  but  is 
probably  about  20  lb. 


LAKE  SUPERIOR  AMYGDALOID   COPPER  MINES 


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148  THE  COST  OF  MINING 

BALTIC  LODE 

The  second  type  of  amygdaloid  deposits,  represented  by  the 
Baltic,  Trimountain,  and  Champion  mines  of  the  Copper  Range 
Consolidated  Company,  presents  a  more  difficult  problem  in  oper- 
ating. The  Baltic  lode  has  a  dip  of  about  70°.  Its  hanging 
wall  is  insecure,  so  that  it  will  not  stand  for  any  considerable 
area  without  support.  Moreover,  the  vein  is  wide,  sometimes 
as  much  as  50  ft.,  and  the  vein  stuff  has  more  the  appearance 
of  trap  than  the  ordinary  amygdaloid.  The  great  width  of  the 
vein  would  in  many  cases  make  the  leaving  of  pillars  to  support 
the  hanging  wall  a  very  expensive  and  doubtful  expedient. 

Mining  on  this  lode  by  the  ordinary  methods  used  for  amygda- 
loid deposits  was  a  failure.  The  whole  vein  had  to  be  mined  in 
order  to  find  the  copper  which  was  scattered  somewhat  irregu- 
larly through  the  mass;  but  the  whole  vein  proved  to  be  too  low 
grade  to  pay.  It  would  yield  only  about  14  Ib.  copper  to  the 
ton.  F.  W.  Denton  solved  the  problem  approximately  as  fol- 
lows: The  vein  as  a  whole  yielded  in  the  mill  14  Ib.  copper  and 
probably  contained  six  additional  pounds  of  copper  that  were 
lost  in  the  milling  process.  By  picking  out  waste  or  low-grade 
ore  in  the  mine  it  was  found  that  40  per  cent,  that  would  run  no 
better  than  the  mill  tailings  could  be  rejected.  This  selection 
yielded  the  following  results :  100  tons  mined  contained  2000  Ib. 
copper;  40  tons  were  rejected  containing  240  Ib.;  this  left  60  tons 
of  material  containing  1760  Ib.  of  copper  or  29  Ib.  to  the  ton. 
This  when  sent  to  the  mill  and  treated  with  a  loss  of  7  Ib.  in  the 
tailings  yielded  22  Ib.  per  ton  milled  as  against  14  Ib.  obtained 
before. 

Logically,  this  process  means  additional  expense  as  follows: 
100  tons  of  rock  would  have  to  be  broken  and  only  60  tons  real- 
ized. If  to  break  the  whole  vein  cost  40  cents  a  ton,  the  break- 
ing of  the  60  tons  recovered  must  cost  67  cents  per  ton.  This 
represents  about  the  measure  of  additional  expense  involved  in 
the  selection  process.  The  coarse  waste  picked  out  underground 
can  be  piled  back  as  easily  as  it  can  be  shoveled  into  cars  by  the 
ordinary  process  and  taken  to  the  shaft.  Indeed,  it  is  possible 
that  an  actual  saving  is  effected  in  tramming  by  the  use  of  this 
system  because  it  is  easier  to  get  the  rock  into  a  chute  than  it  is 
to  shovel  it  into  a  car,  and  the  tramming  of  the  rock  from  the 


LAKE  SUPERIOR  AMYGDALOID  COPPER  MINES  149 

chute  to  the  shaft  is  practically  as  cheap  as  it  would  be  to  push 
the  cars  to  the  shaft  after  they  were  loaded  by  hand. 

PECULIARITIES  OF  SORTING  AND  FILLING  METHOD 

This  method  of  filling  the  stopes  by  rock  sorted  from  the  vein 
itself  is  a  novelty  in  Lake  Superior  though  not  in  the  mines  of 
the  West.  Since  it  was  developed  independently  by  Mr.  Denton, 
it  resulted  in  one  or  two  points  of  practice  different  from  that 
employed  anywhere  else. 

The  rock  sorted  from  the  vein  is  hard  and  rough,  and  this 
fact  has  been  taken  advantage  of  in  building  up  stone  walls  on 
the  levels  instead  of  using  timbered  drifts.  These  stone  walls 
are  covered  with  large  timbers  and  lagging  and  then  the  whole 
thing  is  covered  with  the  waste  filling.  It  is  found  that  stone 
walls  resist  the  pressure  of  the  accumulating  filling  very  much 
better  than  any  timber,  and  in  fact  maintain  themselves  in  per- 
fect condition  as  long  as  they  are  required.  The  mill  holes 
leading  through  the  waste  to  the  working  faces  at  the  top  instead 
of  being  built  of  wooden  cribbing  are  circular  wells  laid  in  stone. 
In  building  the  walls  on  the  main  levels  and  in  the  mill  holes, 
advantage  has  been  taken  of  the  presence  of  Italian  and  Austrian 
miners  who  usually  have  had  experience  in  laying  stone  walls 
in  their  own  country.  The  total  result  is  a  very  pretty  adapta- 
tion of  methods  to  the  natural  conditions. 

The  results  in  dollars  and  cents  obtained  by  this  method  are 
all,  and  rather  more,  than  could  be  expected.  As  compared 
with  the  Wolverine  we  find  that  in  1905  the  underground  costs 
at  the  Baltic  were  $1.04  a  ton,  and  in  1906,  $1.06  a  ton,  against 
$0.93  and  $0.98,  respectively,  at  the  Wolverine,  a  difference  of 
about  10  cents  a  ton  as  against  the  27  cents  increase  that  we 
might  have  expected.  The  Copper  Range  mines  are,  however, 
less  than  1000  ft.  deep,  while  the  Wolverine  will  average  more 
than  2000  ft.;  so  that  the  former  gets  some  advantage  in  costs 
on  this  account. 

There  are  certain  advantages  in  the  sorting  and  filling  system 
over  and  above  mere  availability.  These  are:  (1)  The  security 
of  the  mine;  (2)  the  fact  that  no  pillars  need  be  left  for  any  rea- 
son, unless,  indeed,  the  shafts  are  sunk  in  the  vein,  in  which  case 
it  is  always  necessary  to  leave  some  ground  on  each  side  of  the 
shaft;  (3)  the  system  completely  solves  the  question  of  exploring 


150 


THE  COST  OF  MINING 


the  vein  for  its  copper  contents;  enough  ground  can  always  be 
taken  to  expose  stringers  and  bunches  running  into  the  walls. 

COSTS  AT  COPPER  RANGE  MINES 

Outside  of  the  operations  in  the  mine  itself,  the  Copper  Range 
Company  does  its  business  much  as  other  amygdaloid  mines  do; 
whatever  further  economies  it  achieves  are  entirely  due  to  mechan- 
ical reasons  and  the  volume  of  material  handled  and  not  to  dif- 
ferences in  the  method.  The  accompanying  table  gives  the 
results  obtained  in  recent  years. 

COSTS  OF  MINES  OF  THE  COPPER  RANGE  CONSOLIDATED  COMPANY,  1906 


Baltic 

Champion 

Trimountain 

Tons  stamped    
Superintendence  and  labor   

649,932 

Per  Ton 
$0.79 

671,785 

Per  Ton 
$0.86 

506,942 

Per  Ton 

$1.05 

Rock  house 

0.07 

0.10 

008 

Hoisting  

0.06 

0.05 

0.09 

Power  drills                                  .    . 

0.06 

0.07 

0.07 

Timber  and  supplies  

0.15 

0.16 

0.14 

Surface  costs    
Transportation  to  mill  

0.06 
0.17 

0.08 
0.14 

0.07 
0.11 

Stamping   

0.18 

0.22 

0.21 

Smelting,  refining,  and  marketing  .  .  . 
Total  operating 

0.25 
1.79 

0.32 
2.00 

0.23 
2.05 

Taxes    
Construction,  estimated  average  

0.07 
0.10 

0.09 
0.10 

0.08 
0.10 

Average  current  costs    
10,000,000  tons  to  be  mined  in  26  years 
from  time  of  investment  at  5  per 
cent,  interest  and  2  per  cent,  amorti- 
zation 

1.96 
0  15 

2.19 

0  27 

2.23 
022 

Recent  yield  copper  per  ton  

$2.11 
22  Ib. 

$2.46 
25  Ib. 

$2.45 
19  Ib. 

Current  cost  copper  per  Ib  
Cost  of  copper,  per  pound,  complete  . 

9  cents 
9^  cents 

8J  cents 
9|  cents 

11.7  cents 
12|    cents 

The  following  statements  from  the  excellent  reports  of  the 
Copper   Range   Company   show   the   statistical   history   of   these 


LAKE  SUPERIOR  AMYGDALOID  COPPER  MINES 


151 


mines  to  date  and  full  details  of  the  operations  for  1908.  The 
record  seems  to  warrant  the  belief  that  these  mines  can  produce 
copper  more  cheaply  than  any  other  amygdaloid  mines  in  the 
Lake  Superior  region,  except  the  Wolverine. 


BALTIC  MINING  COMPANY  —  STATEMENTS  OF  RECEIPTS  AND  EXPENDITURES 
FROM  DATE  OF  ORGANIZATION  TO  DECEMBER  31,  1908 


Receipts 


Capital  stock  issued  for  purchase  of  mine  ............. 

Assessment  No.  1,  January  1.2,  1898    ................. 

Assessment  No.  2,  October  27,  1898  .................. 

Assessment  No.  3,  September  18,  1899    ............... 

Assessment  No.  4,  April  3,  1901    ..................... 

From  sale  of  copper  (1898)  25,000  Ib.  at  12.33  cents  .  .  . 
From  sale  of  copper  (1899)  621,336  Ib.  at  16.93  cents  .  . 
From  sale  of  copper  (1900)  1,735,060  Ib.  at  16.49  cents  . 
From  sale  of  copper  (1901)  2,641,432  Ib.  at  16.43  cents  . 
From  sale  of  copper  (1902)  6,285,819  Ib.  at  11.87  cents  . 
From  sale  of  copper  (1903)  10,580,997  Ib.  at  13.43  cents 
From  sale  of  copper  (1904)  12,177,729  Ib.  at  12.98  cents 
From  sale  of  copper  (1905)  14,384,684  Ib.  at  15.62  cents 
From  sale  of  copper  (1906)  14,397,557  Ib.  at  19.05  cents 
From  sale  of  copper  (1907)  16,704,688  Ib.  at  17.28  cents 
From  sale  of  copper  (1908)  17,724,854  Ib.  at  13.39  cents 
Balance  of  interest  account  . 


Expenditures 

Real  estate(Baltic  Mine  location)  $1,000,000.00 

Real  estate  (lands  since  purchased) 14,751.00 

$1,014,751.00 

Net  expenditure  for  construction  and  equip- 
ment, mining  operations,  smelting  and 
marketing  copper,  taxes,  and  incidentals.  10,472,448.09 


Less  dividends  paid  in  1905 $1,250,000.00 

Less  dividends  paid  in  1906 1,400,000.00 

Less  dividends  paid  in  1907 1,000,000.00 

Less  dividends  paid  in  1908 900,000.00 


Excess  of  receipts  over  expenditures    

Total  copper 97,279,329 

Total  cost  copper  to  date  for  plant  and  operating 


$1,000,000.00 

100,000.00 

100,000.00 

300,000.00 

300,000.00 

3,082.50 

105,240.58 

286,046.85 

433,947.78 

746,276.02 

1,421,211.36 

1,581,640.67 

2,246,912.48 

2,742,402.69 

2,886,057.65 

2,372,849.47 

29,442.90 

$16,655,110.95 


11,487,199.09 
$5,167,911.86 


4,550,000.00 

$617,911.86 
.10.77  cents 


152  THE  COST  OF  MINING 

BALTIC  MINING  COMPANY  —  STATEMENT  OF  WORKING  EXPENSES    AT  THE 
BALTIC  MINE  FOR  THE  YEAR  ENDING  DECEMBER  31,  1908 

Mining  Costs  Per  Ton 

Superintendence  and  labor $605,426.20 

Rock  house  expense 48,961.36 

Hoisting  expense 51,530.05 

Power  drill  expense 42,999.24 

Timber  and  supplies    127,595.86 

—        $876,512.71    $1.15 

Surface  Expenses 

Superintendence  and  labor $24,468.23 

Supplies 4,282.34 

Insurance    8,829.73 

Purchasing  department 2,157.43 

Legal  and  general  expenses    1,814.11 

41,ool.o4       O.Oo 

Transportation  of  rock  to  mill 108,838.77      0.14 

Stamp  mill  expenses 132,330.45      0.17 

$1,159,233.77 
Less  rents  received    6,061.72 

Net  running  expenses $1,153,172.05    $1.51 

Summary  of  Results 

Rock  stamped    764,117  tons 

Product  of  mineral 25,282,145  Ib. 

Product  of  refined  copper 17,724,854  Ib. 

Yield  of  rock  treated 23.197  Ib.  per  ton,  or  1.16  per  cent. 

Cost  per  ton  of  working  expenses   $1.509 

Cost  per  ton  of  working  expenses,  including  taxes    1.56 

Cost  per  pound  of  copper  delivered,  including  taxes 0772 

Total  cost  at  mine    $1.51 

Construction 

AT   MINE 

No.  3  rock  house   $19,486.12 

New  change  house 13,131.68 

Underground  electric  pumps 8,539.73 

Dwellings 8,453.44 

Clearing  lands  and  grading 1,390.89 

Barns  and  fences. .  629.52 


$51,631.38 
Less  amount  received  from  sale  of  second-hand  crusher.  .  783.25 


Carried  forward   $50,848.13 


LAKE  SUPERIOR  AMYGDALOID  COPPER  MINES 


153 


Brought  forward $50,848.13     $1.51 

AT   MILL 

Addition  to  mill $47,133.41 

Dwellings 1,054.44 

48,187.85 

Total  cost  of  construction    $99,035.98       0.13 

Smelting,  refining,  and  marketing $179,754.60       0.24 

Taxes $38,313.10       0.05 

Total  cost  per  ton    1.93 

Cost  per  pound  copper   8.32  cents. 

CHAMPION  COPPER  COMPANY  —  STATEMENT  OF  RECEIPTS  AND  EXPENDITURES 
FROM  DATE  OF  ORGANIZATION  TO  DECEMBER  31,  1908 

Receipts 

Capital  stock  issued  for  purchase  of  mine $1,025,000.00 

Assessment  No.  1,  November  15,  1899 100,000.00 

Assessment  No.  2,  March  6,  1900    100,000.00 

Assessment  No.  3,  June  25,  1900    25,000.00 

Assessment  No.  4,  September  15,  1900    50,000.00 

Assessment  No.  5,  November  20,  1900 50,000.00 

Assessment  No.  6,  January  16,  1901    50,000.00 

Assessment  No.  7,  April  22,  1901 100,000.00 

Assessment  No.  8,  June  10,  1901    100,000.00 

Assessment  No.  9,  August  21,  1901    100,000.00 

Assessment  No.  10,  October  7,  1901 100,000.00 

Assessment  No.  11,  November  25,  1901 100,000.00 

Assessment  No.  12,  January  15,  1902    100,000.00 

Assessment  No.  13,  February  12,  1902    100,000.00 

Assessment  No.  14,  May  5,  1902 100,000.00 

Assessment  No.  15,  June  5,  1902    100,000.00 

Assessment  No.  16,  September  2,  1902    100,000.00 

Assessment  No.  17,  September  29,  1902    100,000.00 

From  sale  of  copper  (1902)    4,165,784  Ib.  at  11.82  cents 492,553.36 

From  sale  of  copper  (1903)  10,564,147  Ib.  at  13.37  cents 1,412,711.43 

From  sale  of  copper  (1904)  12,212,954  Ib.  at  13.02  cents 1,591,109.71 

From  sale  of  copper  (1905)  15,707,426  Ib.  at  15.56  cents 2,444,554.91 

From  sale  of  fcopper  (1906)  16,954,986  Ib.  at  19.06  cents 3,231,328.71 

From  sale  of  copper  (1907)  16,498,436  Ib.  at  17.28  cents 2,848,838.41 

From  sale  of  copper  (1908)  17,786,763  Ib.  at  13.39  cents 2,381,137.30 


$16,902,233.83 

Expenditures 

Real  estate  (Champion  mine  location) $1,025,000.00 

Real  estate  (lands  since  purchased) 14,095.28 

Carried  forward $1,039,095.28     $16,902,233,83 


154 


THE  COST  OF   MINING 


CHAMPION  COPPER  COMPANY  —  STATEMENT  OF  RECEIPTS  AND  EXPENDITURES 
FROM  DATE  OF  ORGANIZATION  TO  DECEMBER  31,  1908  —  Continued 

Brought  forward $1,039,095.28      $16,902,233.83 

Net  expenditure  for  construction  and  equip- 
ment mining  operations,  smelting  and 
marketing  copper,  taxes  and  incidentals  .  10,881,313.30 

11,920,408.58 
Net  balance  of  receipts 

Dividends  paid  in  1903 $300,000.00        $4,981,825.25 

Dividends  paid  in  1904 200,000.00 

Dividends  paid  in  1905 1,000,000.00 

Dividends  paid  in  1906 1,200,000.00 

Dividends  paid  in  1907 1,000,000.00 

Dividends  paid  in  1908 500,000.00 

4,200,000.00 

Excess  of  receipts  over  expenditures   $781,825  25 

Total  output    93,881,496  pounds 

Cost  per  pound  to  date  for  plant  and  operating  11.5  cents 

CHAMPION  COPPER  COMPANY  —  STATEMENT  OF  WORKING  EXPENSES  AT  THE 
CHAMPION  MINE  FOR  THE  YEAR  ENDING  DECEMBER  31,  1908 

Mining  Costs  PerTon 

Superintendence  and  labor $666,794.70 

Rock  house  expense    46,140.18 

Hoisting  expense 44,499.52 

Power  drill  expense 54,662.92 

Timber  and  supplies   136,107.50 

$948,204.82    $1.19 

Surface  Expenses 

Superintendence  and  labor $20,882.36 

Supplies 6,080.78 

Teaming      1,614.12 

Insurance    9,934.00 

Electric  lights  and  telephones 834.22 

Legal  and  general  expense 2,940.78 

Library  maintenance 1,750.00 

Purchasing  department 3,217.71 

Transportation  of  rock  to  mill 109,066.70        .14 

Stamp  mill  expense 140,699.50        .18 

$1,245,224.99 
Less  rents  received    12,687.51        .02 

Net  running  expense $1,232,537.48    $1.55 


LAKE  SUPERIOR  AMYGDALOID  COPPER  MINES          155 

Summary  of  Results 

Rock  stamped 794,703  tons 

Product  of  mineral 26,579,795  Ib. 

Product  of  refined  copper 17,786,763  Ib. 

Yield  of  rock  treated 22.381  Ib.  per  ton,  or  1.119  per  cent. 

Cost  per  ton  of  working  expenses   $1.5509 

Cost  per  ton  of  working  expenses,  including  taxes 1.6203 

Cost  per  Ib.  of  copper  delivered,  including  taxes •. .  .0834 

Total  cost  at  mine $1.55 

Construction 

AT   MINE 

"D"  coal  adit $4,048.81 

Heating  plant 3,078.30 

Shaft  houses,  changes  and  alterations    13,093.61 

"B"  hoist  and  pulley  stands 5,733.19 

Dwelling  houses  10,425.07 

"C"  hoist  and  pulley  stands 15,159.60 

Automatic  telephones 439.66 

Barns  and  fences 1,880.21 

Underground  electric  pump 9,661.68 

"B"  coal  trestle 4,038.62 

Grading  streets  " B"  location    434.04 

$67,992.79 

AT   MILL 

Completing  installation  of  new  stamps    .  .  .   $13,629.05 

New  tables  and  settling  tanks 27,250.84 

Coal  trestle 11,768.08 

52,647.97 


$120,640.76         .15 

Smelting,  refining,  and  marketing $189,675.36          .24 

Taxes  and  interest $55,624.65          .07 

Total  cost 2.01 

Cost  per  pound 9  cents 

TRIMOUNTAIN  MINING  COMPANY  —  STATEMENT  OF  RECEIPTS  AND  EXPEN- 
DITURES FROM  DATE  OF  ORGANIZATION  TO  DECEMBER  31,  1908 

Receipts 

Capital  stock  issued  for  purchase  of  mine  .  .  .       $800,000.00 
Capital  stock  issued  for  cash 400,000.00        <«  2QO  000  00 

Assessment  No.  1,  December  12,  1900 $300,000.00 

Assessment  No.  1,  April  12,  1901 200,000.00  50Q  000  00 

Carried  forward     $1,700,000.00 


156 


THE  COST  OF  MINING 


TRIMOUNTAIN    MINING  COMPANY  —  STATEMENT  OF  RECEIPTS  AND  EXPEN- 
DITURES FROM  DATE  OF  ORGANIZATION  TO  DECEMBER  31,  1908 
—  Continued 

Brought  forward $1,700,000.00 

Assessment  No.  2,  January  10,1902 $200,000.00 

Assessment  No.  2,  March  10,  1902 100,000.00 

300,000.00 


From  sale  of  copper  (1902)  5,730,633  Ib. 
From  sale  of  copper  (1903)  9,237,051  Ib. 
From  sale  of  copper  (1904)  10,211,230  Ib. 
From  sale  of  copper  (1905)  10,476,462  Ib. 
From  sale  of  copper  (1906)  9,507,933  Ib. 
From  sale  of  copper  (1907)  8,190,711  Ib. 
From  sale  of  copper  (1908)  6,034,908  Ib. 
Balance  of  interest  account 


Total  copper    59,388,928  Ib. 


Expenditures 

Real  estate  (Trimountain  mine  location)  .... 
Real  estate  (land  since  purchased) 


$800,000.00 
3,000.00 

$803,000.00 


Net  expenditure  for  construction  and  equip- 
ment, mining  operations,  smelting  and 
marketing  copper,  taxes  and  incidentals.  .  .  8,767,724.10 


Net  balance  of  receipts  . 
Dividends  paid  in  1903  . 
Dividends  paid  in  1908  . 


$300,000.00 
500,000.00 


Excess  of  receipts  over  expenditures   

Cost  per  pound,  plant  and  operating 


712,959.76 
1,186,547.57 
1,396,188.30 
1,620,893.76 
1,791,714.68 
1,415,088.48 

807,901.07 
67,572.67 

$10,998,866.29 


9,570,724.10 
$1,428,142.19 


800,000.00 

$628,142.19 
.  .  14.76  cents 


TRIMOUNTAIN  MINING  COMPANY  —  STATEMENT  OF  WORKING  EXPENSES  AT 
THE  TRIMOUNTAIN  MINE  FOR  THE  YEAR  ENDING  DECEMBER  31,  1908 


Mining  Costs 

Superintendence  and  labor $343,270.54 

Rock  house  expense    24,204.46 

Hoisting  expense 48,008.23 

Power  drill  expense 29,461.16 

Timber  and  supplies   68,639.85 


Per  Ton 


$513,584.24     $1.53 
Carried  forward $513,584.24     $1.53 


LAKE  SUPERIOR  AMYGDALOID  COPPER  MINES 


157 


Brought  forward $513,584.24     $1.53 

Surface  Expenses 

Superintendence  and  labor $21,940.35 

Supplies 3,275.25 

Insurance    6,363.72 

Purchasing  department 1,203.13 

Legal  and  general  expenses   1,091-50         33  g73  Q5          1Q 

Transportation  of  rock  to  mill 37,866.46         .11 

Stamp  mill  expense 73,016.00         .22 

$658,340.65 
Less  rents  received    10,110.38 

Net  running  expenses $648,230.27     $1.96 

Summary  of  Results 

Rock  stamped    334,929  tons. 

Product  of  mineral 9,634,979  Ib. 

Product  of  refined  copper 6,034,908  Ib. 

Yield  of  rock  treated 18  Ib.  per  ton,  or  0.9  per  cent. 

Cost  per  ton  of  working  expenses   $1.935 

Cost  per  ton  of  working  expenses,  including  taxes 2.048 

Cost  per  pound  of  copper  delivered,  including  taxes    125 

Total  cost  at  mine    $1.94 

Construction 

AT   MINE 

Steam  laundry $317.76 

Underground  electric  pumps 3,651.77 

$3,969.53 

AT   MILL 

Crushing  rolls $1,133.34 

New  store  building    6,469.55 

7,602.89 

Total  cost  of  construction $11,572.42       0.03 

Smelting,  refining,  and  marketing $71,207.27       0.21 

Taxes $37,903.40       0.11 

Total  cost    $2.29 

Cost  per  pound 12.61  cents 

The   above  figures  exhibit  the  operations  of  this  group   in 
sufficient   detail.     It  remains  to   compute,   without   detail,   the 


158 


THE  COST   OF  MINING 


entire  cost  for  .the  Copper  Range  properties  over  a  period  of  four 
years,  1905  to  1908  inclusive,  for  operating,  construction,  taxes, 
and  all  expenditures. 


Pounds 

Cost 

Per  Pound 
Cents 

Baltic     

63,211,963 

$5,808,000 

9  19 

Champion 

66938  611 

6  512  000 

9  74 

Triinoinitaiii 

34  210  014 

4  172  000 

12  2 

164,360,588 

$16,492,000 

10.00 

It  seems  proper  to  say  that  10  cents  per  pound  is  the  true 
dividend  cost.  Figuring  on  averages  these  mines  would  appear 
to  be  able  to  produce  41,000,000  Ib.  a  year  at  a  profit  of  5.5 
cents.  The  Copper  Range  Company  owns  one-half  the  stock  of 
the  Champion  and  practically  all  the  stock  of  the  other  mines, 
together  with  the  Copper  Range  Railroad.  The  railroad  does 
not  earn  much.  We  may  estimate  the  total  average  earnings 
of  the  company  at  15J  cents  copper  at  $1,750,000  per  year,  equal 
to  some  $4.55  per  share.  Conceding  that  this  average  can  be 
maintained  for  twenty  years  we  may  estimate  a  value  of  $57  a 
share. 


CHAPTER  IX 
CONGLOMERATE  COPPER  MINES  OF  LAKE  SUPERIOR 

TAMARACK  AND  CALUMET  &  HECLA 

Tamarack  and  Calumet  &  Hecla  —  Results  of  Tamarack  —  Comparison  of 
factors  affecting  costs  at  Calumet  &  Hecla  conglomerate  with  amygdaloid 
deposits  —  Record  and  costs  of  Calumet  &  Hecla. 

THE  third  type  of  Lake  Superior  copper  mines  is  represented 
by  the  Tamarack  and  the  Calumet  &  Hecla.  The  record  of  these 
properties  shows  very  clearly  that  the  conglomerate  is  a  more 
difficult  and  expensive  problem  than  the  amygdaloid.  The 
deposit  has  the  advantages  of  remarkable  uniformity  and  con- 
tinuity; but  as  compared  with  the  amygdaloid,  the  conglomerate 
has  three  features  that  substantially  increase  the  cost  of  working : 
(1)  The  richness  of  the  ore  has  averaged  2J  times  as  great  as 
that  of  the  characteristic  amygdaloid;  consequently  the  cost  for 
smelting  has  been  2J  times  as  great,  and  this  fact  has  meant  an 
increased  cost  of  not  far  from  50  cents  a  ton.  (2)  The  conglom- 
erate is  much  harder,  tougher,  and  more  difficult  to  handle. 
It  breaks  in  rough,  ugly  chunks  which  wear  out  the  tram  cars, 
bin  linings,  and  stamp  shoes  very  rapidly.  Its  greater  hardness 
is  reflected  by  the  fact  that  the  mills  will  handle  40  per  cent, 
more  amygdaloid  than  of  conglomerate.  This  characteristic 
in  itself  is  probably  sufficient  to  add  in  the  neighborhood  of  20 
cents  a  ton  to  the  cost  of  handling,  breaking,  tramming,  crushing, 
and  milling  this  ore.  (3)  The  hanging  wall  is  loose  and  the 
mines  need  constant  and  expensive  timbering.  This  item  has 
added  from  25  to  75  cents  a  ton  to  the  cost. 

The  total  of  these  increased  costs  may  be  reckoned  at,  in 
round  numbers,  $1.20  a  ton.  The  above  figures  have  reference 
to  the  average  conglomerate  ore  as  mined  to  date  which  has 
contained  not  less  than  55  Ib.  copper  to  the  ton.  At  present1 
the  Calumet  &  Hecla  is  yielding  only  42  Ib.  a  ton  while  the  Tam- 
arack is  yielding  only  23  Ib.  On  the  present  basis,  therefore, 

1  January,  1898.     The  yield  has  since  fallen  below  35  Ibs. 
159 


160  THE  COST  OF  MINING 

the  smelting  costs  are  somewhat  lower  than  they  would  be  for 
an  average  of  this  class. 

RESULTS  AND  COSTS  AT  THE  TAMARACK 

Up  to  July  1,  1893,  the  Tamarack  mine  had  produced  84,000- 
000  Ib.  copper  from  1,400,000  tons  of  rock,  an  average  of  60  Ib. 
per  ton.  The  cost  for  operating  was  $5,816,083,  or  $4.15  a  ton. 
Construction  on  the  original  mine  from  which  this  ore^came  was 
68  cents  a  ton  additional.  The  total  cost  had,  therefore,  averaged 
$4.80  per  ton  or  8  cents  per  pound  copper.  In  1892-3,  345,925 
tons  were  stamped,  yielding  46.43  Ib.  per  ton.  The  costs  were: 

Underground  mining $1.69 

Rock  house,  surface  and  stamping  0.77 

Smelting    0.82 


Total  operating    $3.28 

Construction  on  old  mine 0.04 

Construction  on  new  shafts   2.14 


Total    $5.46 

By  1899  the  costs  were: 

Total  operating    $3.50 

Construction 0.63 


Total    $4.13 

By  1904  the  costs  had  become: 

Mining  and  stamping    $2.42 

Smelting  and  general 0.61 

Total $3.03 

Of  late  years  a  good  deal  of  amygdaloid  has  been  mined. 

Since  1904  the  operations  on  the  Tamarack  have  been  very 
much  interfered  with  by  a  serious  underground  fire  and  other 
difficulties  and  delays.  It  is  probable  that  the  above  figures 
give  a  fair  idea  of  the  results  obtained.  The  item  of  construc- 
tion has  been  very  heavy  indeed.  It  is  accounted  for  by  the 
sinking  and  equipping  of  five  very  deep  and  expensive  shafts,  It 
appears  that  up  to  1899  the  output  of  the  Tamarack  had  been 
about  4,400,000  tons,  produced  at  a  total  cost  of  $17,600,000,  or 
$4  a  ton.  The  resulting  product  was  195,000,000  Ib.  copper,  or 
an  average  of  about  44.3  Ib.  to  the  ton,  the  cost  of  fine  copper 
being  about  9  cents  a  pound. 


CONGLOMERATE  COPPER  MINES   OF  LAKE  SUPERIOR      161 


CALUMET  &  HECLA 

The  Calumet  &  Hecla  has  been  a  rich  mine  and  its  costs  may 
have  been  somewhat  higher  than  were  strictly  necessary.  For 
the  last  ten  years  it  seems  that  the  costs  have  averaged  a  little 
over  $4  a  ton,  but  since  the  company  issues  no  detailed  reports, 
it  is  possible  to  make  only  an  approximation.  This  cost  does 
not  appear  at  a  disadvantage  compared  with  the  Tamarack,  for 
while  the  Tamarack  ores  averaged  about  44  Ib.  copper  per  ton, 
those  of  the  Calumet  &  Hecla  have  averaged  50  Ib.;  and  while 
it  is  true  that  the  Tamarack  has  expended  large  sums  on  new 
construction  and  development,  it  must  not  be  forgotten  that  the 
Calumet  &  Hecla  has  done  the  same  thing  during  the  same  period. 
At  present  the  Calumet  &  Hecla  is  mining  an  increasing  propor- 
tion of  amygdaloid  from  the  neighboring  Osceola  and  Kearsarge 
lodes  to  the  eastward  of  the  conglomerate. 

It  appears  that  the  conglomerate  workings  as  compared  with 
a  representative  amygdaloid  mine  like  the  Wolverine  would 
appear  somewhat  as  follows : 

Underground  factors  making  for  increased  cost  are:  the  very 
great  depth,  averaging  more  than  4000  ft.  vertically;  the  consider- 
able heat,  averaging  about  80°;  the  necessity  of  timbering,  which 
in  itself  accounts  for  at  least  30  cents  a  ton ;  the  hard  angular  char- 
acter of  the  ore  which  renders  shoveling,  tramming,  and  handling 
more  difficult  and  expensive;  and  finally,  the  difficulty  of  main- 
taining the  deep  inclined  shafts  under  a  weak  hanging  wall. 

It  does  not  seem  unreasonable  to  appraise  these  factors  at 
50  cents  a  ton,  at  least,  excess  cost  over  that  of  the  amygdaloid 
mine  of  moderate  depth.  The  cost  of  milling  the  ore  should  be 
approximately  15  cents  a  ton  greater;  while  the  cost  of  smelting 
42  Ib.  fine  copper  per  ton  as  against  22  Ib.  should  be  25  cents 
more.  To  sum  up  it  appears  that  mining  costs  representing  the 
two  types  should  compare  about  as  follows: 


Amygdaloid 

Conglomerate 

Underground  expense  and  rock  house   

$1.10 

$1.60 

Transportation  and  milling    

0.40 

055 

General  expense   

022 

022 

Smelting,  refining  and  marketing   . 

025 

050 

Total 

$1  97 

$2  87 

162  THE  COST  OF  MINING 

The  above  costs  omit  the  item  of  construction  which  has 
always  been  a  very  large  item  with  these  mines.  It  is  safe  to 
say  that  the  Calumet  &  Hecla  has  spent  40  cents  a  ton  through- 
out its  career  on  its  plant  for  construction. 

The  costs  of  Calumet  &  Hecla  on  Osceola  amygdaloid  for  1906 
are  reported  as  follows: 

Mining $0.9993 

Hoisting 0.101     [       $1.2039 

Rock  house 0.1336 

Transportation 0.0844 

Milling 0.2631  }         0.3655 

Other  .  .  0.018 


Total    $1.5694          $1.5694 

Assuming  that  the  output  is  18  Ib.  copper  per  ton,  we  must 

add  for  smelting,  refining,  and  marketing 0.22 


Add  also  general  expense,  same  as  for  Wolverine 0.22 


Total $2.0094 

CALUMET  &  HECLA  RECORDS 

Until  1908  this  great  company  had  been  extremely  guarded 
in  giving  out  information  about  its  operating  results.  In  order 
to  form  an  idea  of  its  costs  it  was  necessary  to  compile  such 
scraps  of  information  as  could  be  gleaned  from  a  series  of  reports 
and  make  such  deductions  as  seemed  warranted.  This  state  of 
affairs  now  seems  partly  to  be  a  thing  of  the  past.  A  legal  con- 
troversy over  the  right  of  the  Calumet  &  Hecla  to  control  and 
manage  the  Osceola  Consolidated  Mining  Company  resulted  in 
the  disclosure  of  most  of  the  essential  facts  regarding  the  former 
company's  business  condition.  In  the  report  for  1908  Presi- 
dent Agassiz  frankly  gives  these  facts  and  it  is  to  be  presumed 
that  more  will  be  forthcoming  in  succeeding  reports.  The  fol- 
lowing summary  shows  the  facts  that  may  be  had  from  the 
reports  in  the  past  eleven  years : 


CONGLOMERATE  COPPER  MINES  OF  LAKE  SUPERIOR  163 


Year 

Tons 
Fine 
Copper 

Price 
Cts. 
Per  Lb. 

Dividends 

Spent  in  Purchase 
New  Property 

Balance  of  Quick  Assets 

1897-8... 

41,960 



$4,000,000 



$6,558,456 

1398-9... 

43,879 

— 

7,000,000 

— 

4,398,544 

1899-00.  . 

44,548 

— 

8,000,000 

— 

4,260,858 

1900-01  .  . 

37,933 

— 

6,500,000 

— 

2,168,130  fire 

1901-02.  . 

42,462 

— 

4,000,000 

— 

3,592,779 

1902-03  .  . 

42,216 

— 

2,000,000 

— 

6,557,023 

1903-04.. 

41,612 

— 

4,000,000 

— 

6,583,038 

1904-05  .  . 

43,090 

— 

4,500,000 

42,000  acres 

timber  land 

7,144,000 

1905-06.. 

43,652 

— 

5,000,000 

$184.859 

10,629,819 

1906-07  .  . 

46,297 

— 

7,500,000 

9,223,395 

7,028,942 

1907-08.. 

43,264 

— 

5,000,000 

— 

4,700,755 

- 

470,913 

15.2 

$57,500,000 

$9,408,254 

1,857,701  decrease 

- 

1,857,701 

Total  cash  earnings  • 

55,642,299 

Add  investments,  partial 

only            

9,408,252 

65,050,551 

1888 Milled  814,000  tons  for  50,295,721  Ib.  copper  —  61£  Ib.  per  ton. 

1897-8 Cost  $4.05  per  ton  milled. 

1899-00 Pounds  copper  per  tori  59.93,  1,464,697  tons  milled. 

1902 Pounds  copper  per  ton  52.44. 

1904-5 Milled  74,235  tons  Osceola  amygdaloid  22  Ib.  per  ton. 

1906 Milled  in  March  27,018  Osceola  amygdaloid. 

1905-6 Milled  1,900,000  tons  for  87,304,000  Ib.  —  45.9  Ibs.  per  ton. 

1906-7 Milled  1,900,000  tons  Calumet  conglomerate. 

350,000  tons  Osceola  amygdaloid  for  6,892,548  Ib. 

2,250,000  altogether  for  92,584,000  Ib.  =  41  Ib.  per  ton. 

1907-8 Milled  1,894,176  tons  conglomerate  averaging  39.68  Ib.  per  ton. 

603,891  tons  Osceola  amygdaloid  yielding  11,145,220  Ib.,  or 
18.4  Ib.  per  ton. 

In  the  year  ending  April  30,  1908,  the  "Product"  of  refined 
copper  is  stated  at  78,980,466  Ib.  There  is  some  reason  to  be- 
lieve that  this  means  "Product  sold."  It  is  also  reported  that 
the  company  was  constantly  in  the  market,  selling  copper  during 
the  declining  prices  of  1907.  If  this  is  so,  it  must  have  realized 
practically  the  quotational  average  for  the  period,  or  16.6  cents. 
On  this  basis  the  receipts  for  the  year  were  about  $13,100,000. 
The  dividends  were  $5,000,000,  leaving  a  balance  of  $8,100,000. 


164  THE  COST  OF  MINING 

There  is  no  mention  made  of  any  considerable  outside  invest- 
ments made  during  the  year  except  the  purchase  of  50,100  shares 
in  the  Gratiot  Mining  Company.  What  the  price  was  is  not 
stated.  Some  explorations  were  also  carried  on  in  various  places. 
Under  these  circumstances  an  estimate  of  the  cost  of  mining  is 
nothing  but  a  guess.  However,  I  will  venture  the  guess.  In 
1907  the  dividends  were  $7,500,000.  In  addition  $9,223,000 
were  expended  in  the  purchase  of  property,  but  in  so  doing  the 
balance  of  assets  was  diminished  $3,600,000,  leaving  a  net  ex- 
penditure of  about  $5,600,000  from  the  proceeds  of  that  year's 
business.  The  total  profits  then  must  have  been  about  $13,100,- 
000.  The  revenue  from  copper  sales  for  that  year  was  approx- 
imately $20,400,000.  Deducting  the  profits  we  have  left  the 
costs,  about  $7,300,000.  In  that  year  350,000  tons  of  Osceola 
amygdaloid  was  mined  at  an  expense  of  $700,000.  Deducting 
this  we  have  $6,600,000  as  the  cost  of  mining  1,900,000  tons  of 
conglomerate,  $3.47  a  ton. 

In  the  following  year  a  cut  of  10  per  cent,  was  made  in  wages, 
but  not  until  the  latter  part  of  the  fiscal  year.  The  effect  of 
this  probably  was  to  diminish  costs  by  5  per  cent,  for  the  whole 
fiscal  year. 

For  1908,  then,  I  place  the  cost  of  mining  the  conglomerate 
at  $3.30  and  for  the  Osceola  amygdaloid  at  $1.90.  The  total 
cost  then  would  be: 

Conglomerate,  1,894,176  tons  at  $3.30 $6,230,000 

Amygdaloid,  603,891  tons  at  $1.80 1,150,000 


Total    $7,380,000 

Estimated  cost  of  outside  work  and  investments 720,000 


$8,100,000 

These  figures  should  be  read  in  the  light  of  the  following 
remarks  by  President  Agassiz  in  the  report  for  1908: 

"In  several  of  the  previous  annual  reports  the  attention  of 
the  stockholders  has  been  called  to  the  unsatisfactory  character 
of  the  conglomerate  below  the  57th  level  in  the  northern  part  of 
the  mine.  In  1900,  the  year  before  Mr.  McNaughton  became 
General  Manager  of  the  Company,  the  conglomerate  yielded 
about  59.93  Ib.  of  copper  to  the  ton.  I  regret  to  state  that 
since  then  this  percentage  has  annually  been  diminishing.  In 
1902  it  had  fallen  to  52.44  Ib.  to  the  ton.  For  the  past  fiscal 


CONGLOMERATE  COPPER  MINES  OF  LAKE  SUPERIOR  165 

year  its  yield  was  39.68  Ib.  To  maintain  our  product  we  have 
stamped  an  additional  amount  of  conglomerate  rock  in  addition 
to  the  amygdaloid  rock  mined  from  the  Osceola  lode,  which 
has  been  increased  from  74,235  tons  in  1905  to  603,891  tons  in 
1907-08.  The  amount  of  conglomerate  stamped  has  gradually 
increased  from  1,464,697  tons  in  1900  to  1,894,176  tons  in  1907- 
08.  Thus  in  1907-08  eating  into  the  available  conglomerate  at 
a  rate  far  in  excess  of  that  we  had  been  accustomed  to  consider 
the  normal  output  plainly  shows  that  your  Directors  did  not 
seek  too  soon  for  an  additional  source  of  copper  supply  to  replace 
that  obtained  from  the  waning  conglomerate  lode.  We  antici- 
pate a  still  further  reduction  in  the  percentage.  During  the  last 
five  years  the  cost  per  ton  of  rock  has  been  greatly  reduced, 
partially  offsetting  the  decrease  in  the  copper  contents  of  the 
rock." 

It  will  be  seen,  by  a  study  of  the  table  given  above,  that  the 
average  cost  of  copper  for  eleven  years  must  have  been  8.16  cents 
a  pound.  Ten  years  ago  it  probably  was  7  cents  for  a  safe 
average  and  is  now  about  9  cents. 


CHAPTER  X 

COPPER    MINES    ON    FISSURE    VEINS    IN    MONTANA, 
AUSTRALIA,  AND   ARIZONA 

COPPER  MINES  OF  BUTTE,  MONTANA 

General  conditions  at  Butte  —  External  and  internal  factors  —  Method  of 
treatment  —  Mining  cost  factors  compared  with  those  of  Lake  Superior 

—  Records  of  Butte  mines  —  Wallaroo  and  Moonta  mines  in  Australia 

—  Old  Dominion  Copper  Mining  and  Smelting  Company. 

THE  external  factors  of  mining  cost  in  the  Butte  district  are 
unfavorable.  The  district  is  situated  on  a  semi-arid  plateau  at 
great  distances  from  the  important  industrial  centers  of  North 
America;  in  a  region  containing,  it  is  true,  supplies  of  fuel,  tim- 
ber, and  water  for  power  purposes,  but  these  supplies  are  in  every 
case  situated  at  considerable  distances  from  the  mines  and  under 
conditions  not  favorable  for  cheap  delivery.  Most  of  the  mining 
supplies  and  all  of  the  copper  product  must  be  shipped  long  dis- 
tances overland  on  railroads  operating  in  sparsely  populated 
districts  with  high  gradients  and  high  operating  costs.  The 
freight  by  rail,  for  instance,  on  copper  from  Butte  to  New  York 
is  at  least  six  times  as  great  as  the  rate  by  water  from  Lake 
Superior  to  New  York. 

The  labor  employed  in  the  Butte  mines  is  vigorous,  intelli- 
gent, and,  under  normal  conditions,  abundant;  but  on  the  other 
hand,  the  wages  are  the  highest  paid  in  the  United  States,  if  not 
in  the  world,  for  any  considerable  volume  of  labor.  Up  to  1901 
the  average  wages  paid  were  37  cents  an  hour.  Since  1901  they 
have  averaged  47  cents  an  hour,  these  figures  being  compared 
with  25  cents  an  hour  for  Lake  Superior.  It  is  indeed  probable 
that  the  Butte  miners  are  better  and  more  effective  than  those 
of  Lake  Superior,  but  hardly  to  the  extent  required  to  make  up 
this  great  difference.  Under  present  conditions,  wages  in  Butte 
are  nearly  100  per  cent,  higher  than  in  Lake  Superior.  It  seems 
unreasonable  to  estimate  that  more  than  half  of  this  difference 

166 


COPPER  MINES   ON  FISSURE  VEINS  167 

can  be  made  up  by  superior  efficiency  in  Butte,  so  that  in  round 
numbers  we  shall  have  to  estimate  labor  costs  in  Butte  as  at 
least  50  per  cent,  higher  than  in  Lake  Superior. 

One  unfavorable  factor  which  may  be  classed  as  external  is 
the  location  of  claims  under  the  apex  law.  This  has  meant  the 
parceling  out  of  the  surface  in  small,  irregular,  and  conflicting 
fragments,  and  this  fact  has  interposed  a  serious  obstacle  to  the 
comprehensive  development  and  working  of  the  mines.  In 
this  respect  Butte  does  not  perhaps  suffer  by  comparison  with 
other  mining  districts  in  the  Rocky  Mountain  region;  but  as 
compared  with  Lake  Superior,  this  feature  must  be  classed  as  a 
pronounced  disadvantage. 

INTERNAL  FACTORS 

The  internal  factors  of  the  Butte  mines  are  not  unfavorable 
for  fissure  vein  deposits,  but  they  present  certain  characteristics 
which  make  for  increased  costs  as  compared  with  Lake  Superior. 
The  ores  all  come  from  an  area  of  about  two  square  miles,  and 
from  this  area  the  output  of  copper  and  silver  has  been  simply 
prodigious.  This  is  a  favorable  feature. 

The  veins,  according  to  H.  V.  Winchell,  belong  to  three  dif- 
ferent systems.  Of  these  the  first  and  oldest,  called  the  Ana- 
conda system,  strikes  east  and  west  and  dips  to  the  south.  The 
filling  of  these  veins  is  quartz  and  pyrites  in  which  the  original 
proportion  of  copper  was  probably  small.  These  veins  are  inter- 
sected by  mineralized  fault  fissures  striking  northeast  and  south- 
west, and  both  these  systems  are  intersected  and  faulted  by  a 
third  system  of  mineralized  fissures  running  northwest  and 
southeast.  In  addition  to  these  veins,  still  later  barren  faults 
of  considerable  displacement  intersect  all  the  orebodies. 

The  result  is  a  great  complexity  of  vein  structure  which  has 
proved  a  serious  problem  to  unravel.  As  might  be  expected  the 
various  faults  are  accompanied  by  considerable  zones  of  crushing 
and  alteration  which  add  considerably  to  the  difficulty  of  mining. 
An  additional  complexity  is  brought  in  by  the  influence  of 
a  pronounced  reconcentration  of  values  due  to  surface  oxidation 
and  leaching  and  subsequent  deposition  at  greater  depths.  While 
it  is  true  that  in  a  great  measure  the  orebodies  owe  their  com- 
mercial value  to  this  reconcentration,  it  is  also  true  that  it  has 
resulted  in  an  uneven  distribution  of  the  ore  which  imposes  a 


168  THE  COST  OF  MINING 

necessity  of  sorting  and  is  a  factor  of  additional  cost.     The  upper 
200  or  300  ft.  of  the  veins  is  absolutely  barren. 

The  oxidation  of  the  large  bodies  of  pyrites  and  the  decom- 
position of  vast  quantities  of  timber  in  these  mines  has  resulted 
in  the  generation  of  an  unpleasant  degree  of  heat.  The  tem- 
perature must  be  kept  down  by  very  thorough  ventilation.  Here 
we  have  a  factor  that  makes  for  additional  cost. 

METHOD  OF  TREATMENT 

The  process  of  mining  in  Butte  is  conducted  about  as  follows: 
The  ore  is  hoisted  from  the  mine  and  dumped  directly  into  large 
bins  from  which  it  is  drawn  into  railroad  cars  and  transported 
to  combined  concentrating  and  smelting  plants.  A  small  pro- 
portion goes  to  plants  in  the  vicinity  of  Butte  itself,  and  not 
more  than  two  or  three  miles  from  the  mines,  but  by  far  the  greater 
portion  is  taken  to  Anaconda  26  miles  away,  or  to  Great  Falls 
100  miles  away.  At  the  smelters  all  ores  containing  less  than 
6  per  cent,  copper  are  concentrated.  The  higher-grade  ores  are 
smelted  in  blast  furnaces  and  the  concentrates  in  reverberatory 
furnaces  collecting  the  metals  into  a  matte  which  is  bessemer- 
ized  on  the  ground  into  blister  copper.  A  portion  of  this  blister 
copper  is  refined  at  the  Great  Falls  plant,  but  by  far  the  greater 
portion  is  shipped  to  the  Atlantic  seaboard  in  the  neighborhood 
of  New  York  and  there  refined.  Nearly  all  the  copper  output 
of  Butte  is  sold  through  the  agency  of  the  United  Metals  Selling 
Company. 

The  most  pronounced  factor  making  for  high  costs  in  the  Butte 
ores  is  the  large  percentage  that  must  be  smelted.  This  can  be 
estimated  roughly  at  40  per  cent,  as  against  4  per  cent,  for  the 
richest  copper  ores  in  Lake  Superior. 

The  concentrating  and  smelting  are  largely  done  in  two  im- 
mense plants  owned  by  the  Amalgamated  Copper  Company,  one 
at  Anaconda,  and  the  other  at  Great  Falls.  It  is  believed  that 
these  plants  are  equipped  and  operated  as  well  as  any  in  the 
world,  no  pains  having  been  spared  in  capital  expenditure  to 
secure  the  greatest  economy.  But  it  is  manifestly  a  physical 
impossibility  to  smelt  15  to  30  tons  of  ore  at  Butte  for  anything 
like  the  cost  required  to  smelt  one  ton  of  concentrates  in  Lake 
Superior.  Furthermore,  the  Butte  copper  must  stand  not  only 
a  very  heavy  transportation  expense  to  the  seaboard,  but  must 


COPPER  MINES  ON  FISSURE  VEINS  169 

further  undergo  the  expensive  process  of  electrolytic  refining. 
The  logical  result  of  these  conditions  is  that  in  Butte  $4  a  ton 
for  concentrating,  smelting,  and  refining  may  be  considered  as 
an  absolute  minimum  as  against  a  cost  of  from  60  cents  to  $1  in 
Lake  Superior. 

MINING  IN  THE  BUTTE  DISTRICT 

It  is  not  my  intention  to  go  into  the  details  of  mining  prac- 
tice further  than  to  point  out  the  general  characteristics  that 
determine  the  costs,  but  it  may  be  pertinent  to  mention  in  a 
general  way  the  methods  in  use  underground.  The  Butte  ore 
is  all  opened  by  vertical  shafts  which  at  present  have  attained 
depths  of  from  1800  to  2800  ft.  Levels  are  run  out  at  intervals 
of  100  to  200  ft.  A  large  amount  of  work  is  necessary  to  dis- 
cover and  develop  the  ores  and  many  thousand  feet  of  exploring 
drifts  and  crosscuts  must  be  run  through  country  rock  in  pursuit 
of  the  various  ore  shoots.  Here  is  an  item  estimated  at  30  cents 
a  ton  for  exploration  work  that  is  quite  absent  from  the  prom- 
inent Lake  Superior  copper  mines. 

In  stoping,  the  walls  are  found  to  be  soft  enough  to  require 
constant  timbering,  usually  by  square  sets.  In  many  places 
the  effect  of  the  faults  above  mentioned  has  been  to  produce 
rock  so  soft  as  to  make  the  timbering  especially  difficult  and 
expensive.  As  a  rule  the  stopes  require,  in  addition  to  the  tim- 
bering, a  rock  filling  for  safety.  This  filling  is  obtained  mainly 
out  of  exploring  drifts  and  to  some  extent  from  the  surface,  but 
also  in  some  cases  it  has  been  found  necessary  to  make  rooms  in 
the  country  rock  for  the  mere  purpose  of  securing  waste  filling. 
It  does  not  appear  that  a  great  deal  of  waste  is  sorted  for  filling 
out  of  the  vein  itself,  although  it  suggests  itself  to  the  casual 
visitor  that  this  is  a  point  that  might  be  gone  into  rather  seri- 
ously. Since  the  cost  of  transportation,  concentrating,  smelting, 
refining,  and  marketing  amounts  to  at  least  $4  a  ton,  it  would 
seem  as  if  the  point  at  which  ore  already  broken  would  better 
be  left  in  the  mine  than  treated  is  about  1£  to  1 J  per  cent,  copper. 

All  the  mines  of  Butte  are  run  on  the  same  principle;  when 
you  describe  one  you  describe  them  all.  I  select  the  Anaconda 
mine  as  a  basis  for  comparison  with  the  Calumet  &  Hecla  in  Lake 
Superior,  not  for  the  purpose  of  drawing  any  invidious  compari- 
sons of  management,  but  for  the  purpose  of  calling  attention  to 


170 


THE  COST  OF  MINING 


the  factors  which  I  believe  establish  the  costs  per  ton.  In  such 
a  comparison  it  is,  of  course,  absurd  to  lay  claim  to  accuracy, 
but  since  the  object  of  this  discussion  is  to  find  out  why  costs 
are  different  in  different  places,  it  seems  proper  to  enumerate 
what  reasons  one  may  see. 

APPRAISEMENT  OF  COST  FACTORS  AT  ANACONDA  AND  AT  CALUMET  &  HECLA 


Calumet  & 
Hecla 

Anaconda 

Difference 
against 
Anaconda 

Costs  at  Mine  — 
Stoping  labor  

$1.10 

$1.65 

$056 

Exploration 

0  30 

0  30 

Supplies  including  timber  
General  expense  .    . 

0.50  . 
0.22 

0.90 
050 

0.40 
0  98 

Total  

$1.82 

$335 

Construction  and  amortization 

0  40 

0  40 

Outside  Costs  — 
Freight  to  mill 

$2.22 
$0  15 

$3.75 
$0  15 

+  $1.53 

Cost  concentrating  

0.55 

Cost  smeltin0" 

2  90 

+   2  35 

Cost  of  refining  and  marketing  

.50 

1  21 

+      71 

Total  cost 

$3  27 

$7  86 

4.  «4  50 

Percentage  milled,  Calumet  &  Hecla  mine,  100;  Anaconda  90. 
Percentage  smelted,  Calumet  &  Hecla  mine  3;  Anaconda  mine,  45. 
Pounds  copper  to  ton,  Calumet  &  Hecla  mine,  42;  Anaconda  mine,  63. 

The  accompanying  table  shows  the  reported  costs  for  the 
various  mines  at  Butte  since  the  year  1903.  Two  facts  are 
worth  noting:  First,  that  the  cost  for  mining  proper  has  tended 
to  rise,  probably  on  account  of  an  increased  proportion  of  devel- 
opment work  undertaken  in  recent  years;  second,  that  the  cost 
of  reduction  and  also  of  refining  and  marketing  have  come  down 
notably.  This  reduction  is  probably  due  to  the  great  metallur- 
gical improvements  that  have  been  effected  by  reason  of  the 
liberal  policy  of  the  Amalgamated  Copper  Company  in  its  ex- 
penditures to  provide  better  smelting  facilities  and  also  its  good 
management.  A  further  reason  for  diminishing  costs  in  smelting, 
refining,  and  marketing  is  a  diminution  in  the  metallic  contents 
of  the  ore,  a  greater  amount  being  concentrated  and  a  less  amount 


COPPER  MINES   ON  FISSURE  VEINS 


171 


being  smelted  and  refined  per  ton.  In  the  case  of  the  Boston  & 
Montana  a  considerable  saving  has  also  been  effected  in  trans- 
portation costs. 

COSTS  AT  MONTANA  COPPER  MINES 

ANACONDA  COPPER  COMPANY 
(Transportation  to  Anaconda  26  miles) 


Tons 

Mining 

G 

Freight  to 
Smelter 
per  Ton 

Reduction 
Ton 

Refining  — 
Marketing 
per  Ton 

Total 
Cost 
per  Ton 

1903  

1,392,835 

$3.49 

$0.15 

$3.39 

$2.30 

$9.33 

1904  
1905 

983,001 
1  473,644 

3.73 
3.56 

0.15 
0.15 

3.82 
3.00 

1.96 
1.11 

9.66 

7  82 

1906 

1  521  310 

3.63 

0.15 

2.27 

1  08 

7  13 

1907  

1,401,948 

4.47 

0.16 

2.52 

0.93 

808 

BOSTON  &  MONTANA 

(Transportation  to  Great  Falls) 


1903     

907,227 

$2.61 

$1.00 

$3.05 

$2.90 

$9.54 

1904            .    ... 

988,866 

2.89 

1.00 

2.53 

1.81 

823 

1905  
1906  

1,138,307 
1,209,805 

2.91 
3.45 

1.00 
0.93 

2.21 
2.45 

1.69 
0.90 

7.81 
773 

1907      

1,156,785 

3.93 

0.76 

267 

092 

828 

BUTTE   &   BOSTON 

(Transportation  to  Anaconda) 


1903     

245,333 

$3.27 

$0.16 

•$2.44 

$1.12 

$699 

1904            

202,286 

3.42 

0.17 

2.67 

1  05 

7  31 

1905 

260  433 

3.31 

0  19 

2  45 

079 

6  74 

1906  

246,593 

3.51 

0.20 

2.06 

1.25 

702 

1907  

331,629 

3.79 

0.21 

2.27 

085 

722 

BUTTE    COALITION 


1906  

149,101 
412,169 

$3.94 
5.49 

$0.60 
0.29 

$3.94 
2.29 

$1.50 

$9.98 

1907  

NORTH  BUTTE 

1906  
1907  

259,650 
374,632 

$4.47 
4.53 

$0.20 
0.20 

$4.84 
4.04 

— 

$9.51 
8.77 

It  is  to  be  noted  that  the  Butte  &  Boston  ores  have  cost  less 
than  the  others.     This  is  undoubtedly  due  to  their  lower  grade; 


172  THE  COST  OF  MINING 

the  proportionate  cost  for  smelting,  refining,  and  marketing  being 
less.  On  the  other  hand,  the  North  Butte  has  cost  more  on 
account  of  its  higher  grade,  and  Butte  Coalition  has  cost  more 
than  the  average  on  account  of  the  large  expenditures  for 
improvements. 

WALLAROO  AND  MOONTA 

An  example  of  mine  conditions  and  costs  similar  to  those  of 
Butte  is  furnished  on  the  other  side  of  the  world  by  the  Wal- 
laroo and  Moonta  mines  of  South  Australia.  These  mines  have 
not  been  described  with  the  definiteness  one  would  like;  but  in 
a  general  way  the  first  is  a  group  of  fissure  veins  in  metamorphic 
schist  and  the  second  a  similar  group  of  fissures  in  porphyry.  The 
production  of  the  district  has  not  been  so  large  as  that  of  Butte, 
and  the  mineralization  is  less  intense.  The  mining  costs  are 
somewhat  higher  because  exploration  is  more  expensive,  but  in 
other  respects  the  parallel  with  the  great  Montana  camp  is  close 
and  interesting. 

These  mines  are  described  by  the  general  manager,  H.  Lipson 
Hancock  (  son  of  the  inventor  of  the  Hancock  jig)  in  a  pamphlet 
issued  at  Wallaroo,  in  November,  1907.  The  mines  were  dis- 
covered in  1860.  In  forty-seven  years  these  mines  have  raised 
and  extracted  as  follows: 

Dressed  ore  and  concentrates    1,670,360  tons. 

Copper,  averaging  15  per  cent,  in  ore 248,993  tons. 

Total  value  £13,944,445 

Total  cost   £11,285,809 

Total  dividends    £2,018,254 

Average  cost  per  ton  of  concentrates £6  15s.  2d. 

"The  dressed  ore  of  Wallaroo,"  says  Mr.  Hancock,  "has 
throughout  recent  times  averaged  about  11  per  cent.;  that  of 
the  Moonta  about  20  per  cent,  of  copper,  excepting  that  in  later 
years  it  has  been  2  or  3  per  cent,  lower.  For  a  long  time  the 
vein  stuff  as  raised  to  surface  at  both  properties  has  contained 
on  the  average  from  3  to  4  per  cent,  copper." 

Port  Wallaroo,  the  smelting  point,  is  situated  on  the  west 
side  of  the  York  peninsula.  The  Moonta  mines  are  twelve  miles 
south  and  the  Wallaroo  mines  six  miles  east  of  the  port.  The 
ore  comes  from  about  ten  different  veins  in  all.  At  the  Wal- 
laroo mines  there  are  three  large  veins  and  several  smaller  ones 
in  metamorphic  mica  schist  supposed  to  be  of  Cambrian  age. 


COPPER  MINES   ON  FISSURE  VEINS 


173 


Most  of  the  work  has  been  confined  to  one  lode  along  which 
were  occurrences  of  copper  near  the  surface  for  a  length  of  10,000 
ft.,  but  at  the  depth  of  2000  ft.  the  length  of  workable  ground 
has  contracted  to  2500  ft.  On  the  other  veins  the  ores  did  not 
prove  remunerative  below  the  1000-ft.  level.  At  Moonta  there 
are  five  veins  of  which  only  one  is  holding  out  below  the  2000-ft. 
level.  In  both  groups  the  copper  is  largely  in  the  form  of  chal- 
copyrite  mixed  with  iron  pyrite.  The  ore  occurs  in  rather  short 
shoots,  often  where  the  vein  is  intersected  by  cross-courses. 

The  high  cost  for  mining  is  easily  explained.  There  are  more 
than  eighty  miles  of  development  openings,  including  shafts, 
drifts,  etc.  This  work  would  probably  cost  at  least  $12  a  foot, 
or  $5,000,000.  This  accounts  for  $3  per  ton  of  dressed  ore,  or 
approximately  75  cents  per  ton  of  vein  stuff  hoisted.  The  actual 
stoping,  including  hoisting,  pumping,  etc.,  costs  about  $3.50  per 
ton.  The  ground  is  soft  like  that  of  Butte,  probably  softer, 
requiring  close  timbering  as  well  as  close  filling.  The  granulated 
slag  from  the  smelter  is  used  for  filling. 

Sorting  and  milling  in  1903  cost  75  cents  at  the  Wallaroo  and 
$1.25  at  the  Moonta.  These  costs  seem  high,  but  the  work  is 
done  with  extreme  care. 

In  terms  of  short  tons  and  American  money  I  find  that  the 
average  cost  of  mining,  concentrating,  and  smelting  a  ton  of 
concentrates  for  the  whole  life  of  the  mine  has  been  $32.90.  In 
recent  years  the  cost  has  exceeded  this  by  about  $2  per  ton. 
The  increased  cost  is  to  be  explained  by  the  increased  depth  and 
a  certain  deterioration  of  the  mines. 

The  accompanying  table  gives  the  cost  of  the  complete  opera- 
tions for  six  out  of  the  last  ten  years.  The  reports  are  excellent. 

COSTS  OF  OPERATION  AT  WALLAROO  AND  MOONTA  FOR  Six  YEARS 


1,176,000  Tons 
Crude 


General  ex- 
pense . . . 


Mining  and 
milling. . 


Interest  and  discount $0.07 

Adelaide  office 0.07 

Special  funds  for  employees 0.04 

Depreciation  and  redemption. .  . .  0.40 

Wages  and  contracts 4.20 

Machinery  and  materials 0.55 

Fuel 0.44 

Buildings 0.04 

Water  supply 0.04 

.General  and  miscellaneous 0.41 


$0.58 


$5.68 


292,889  Tons 
Concentrates 


$2.33 


$22.81 


174 


THE  COST  OF   MINING 


COSTS  OF  OPERATION  AT  WALLAROO  AND  MOONTA  FOR  Six 
YEARS  —  Continued 

292,889  Tons 
Concentrates 

$0.52 


1,1 76, 000  Tons 
Crude 


Freight  on  concentrates 


Wages 

Machinery  and  supplies 

Smelting  . .  ^  Fuel  and  flux $2.37 

Buildings  and  improvements 

General  and  miscellaneous 

Shipping  copper 

Total .  .$8.63 


3.73 
1.33 
3.02 
0.15 
0.28 
0.49 
$34.66 


OLD  DOMINION  COPPER  MINING  AND  SMELTING  COMPANY 

This  famous  property  has  been  working  for  many  years  on 
a  fault  fissure  of  rather  complex  geological  relations  in  the  Globe 
copper  district  of  Arizona.  It  has  not  published  any  detailed 
reports  that  have  come  to  my  attention  prior  to  the  one  for  the 
year  1908,  which  gives  some  information  about  the  two  preced- 
ing years.  The  information  is  exceedingly  interesting  for  the 
additional  light  it  throws  on  the  problem  of  copper  mining  on 
fissure  veins.  It  belongs  to  the  same  class  of  mines  as  those  of 
Butte  and  the  Wallaroo  and  Moonta. 

PRODUCTION  OF  COPPER 

In  1905 15,103,955 

1906 16,653,225 

1907 23,377,841 

1908 30,308,223 


Four  years 85,443,244 

The  silver  and  gold  with  the  ore  are  so  small  in  amount  as  to 
equal  in  value  less  than  2  per  cent,  of  the  copper. 

The  production  in  tons  is  given  only  for  1908,  but  we  can 
figure  for  the  two  preceding  years  by  calculating  back  from  the 
percentage  of  copper  extracted,  which  is  given  for  those  years. 

1906    16,653,225  dry  tons  at  2.83  per  cent.  =  294,070  dry  tons 

1907    23,377,841  3.88  per  cent.  =  301,260 

1908  .    .  .30,308,223  5.15  per  cent.  -  225,227 


820.557 


Three  years,  820,557  tons,  producing  70,339,289  Ib.  copper 
equal  to  85.8  Ib.  per  ton.  If  we  add  2  per  cent,  for  silver  and  gold 
the  copper  equivalent  is  87.5  Ib.  The  latter  figure  is  apparently  an 


COPPER  MINES   ON  FISSURE  VEINS 


175 


average,  because  the  copper  content  is  shown  to  be  variable  and 
it  does  not  appear  safe  to  take  the  figure  for  the  final  year  as 
representative.  It  is  plain  that  the  increased  yield  in  1908  from 
a  less  amount  of  ore  means  increased  selection  of  ore  on  account 
of  lower  prices. 

DEVELOPMENT  WORK 

For  three  years  1734  ft.  of  shaft  sinking  and  55,261  ft.  of 
drifts,  winzes,  and  raises,  a  total  of  56,995  ft.,  were  done  on  the 
property.  It  is  not  stated  that  the  ore  reserves  were  greatly 
increased  by  this  work,  so  that  we  are  led  to  calculate  that  each 
foot  of  development  opens  up  a  little  over  14  tons  of  ore  and 
about  1230  Ib.  copper.  The  cost  of  development  per  foot  can  be 
inferred.  It  is  $15.70  per  foot.  The  cost  of  shaft  sinking  must 
be  high,  owing  to  the  considerable  amount  of  water.  If  the 
drifts,  raises,  and  winzes  average  $12  a  foot,  the  shafts  would 
cost  about  $125  a  foot.  The  development  costs  $1.09  per  ton 
mined  and  1J  cents  per  pound  copper. 

MINING  COSTS 


1905 

1906 

1907 

1908 

Development  

$0.8792 

$1  1436 

$0  9853 

$1  1571 

Pumping   
Mining  (from  stopes  to  surface)  .  . 

.5354 
4.2514 

.5470 
4.4929 

.4331 
4.9152 

.6356 
4.5449 

Total    

$5.666 

$6  1335 

$6  3336 

$6  3336 

CONCENTRATING 

In  1908  about  half  the  ore  was  concentrated.  This  ore  ran 
3.036  per  cent,  copper  and  3.019  tons  were  put  into  1  with  an 
extraction  of  82.5  per  cent.  Hence  we  may  conclude  that  the 
concentrates  ran  7.5  per  cent,  copper. 

TOTAL  OPERATING  RESULTS 

It  appears  that  in  1908  the  total  cost  at  Globe  for  mining, 
concentrating,  and  smelting,  deducting  profit  from  custom  ores, 
was  $3,108,351.  The  tonnage  mined  is  given  at  225,227  tons 
dry.  I  am  at  a  loss  to  understand  how  this  amount  of  ore 
could  have  produced  30,900,000  Ib.  of  copper,  or  its  equivalent, 
with  a  yield  of  only  105  Ib.  per  ton.  This  ore  would  only  yield 


178  THE  COST  OF   MINING 

23,600,000  Ib.  The  explanation  must  be  that  a  lot  of  ore  was 
smelted  that  had  been  mined  previously.  If  this  explains  the 
discrepancy  we  shall  have  to  estimate  that  some  31  per  cent, 
more  ore  was  smelted  than  mined.  On  this  basis  we  get  the 
following : 

225,227  tons  mined  at  6.3336  =  $1,427,383.83 

Concentrated  and  smelted  at       5.703     =     1,680,968. 


294,750  tons 


Refined  and  marketed  at  1.590     --=       471,597. 


Total  cost  per  ton  $13.6266  =  $3,579,948. 


These  are  the  best  costs  I  can  make  out  of  this  report.  If  I 
am  wrong,  the  report  is  simply  unintelligible.  If  the  ore  only 
contains  105  Ib.  copper  equivalent  per  ton,  then  the  cost  per 
pound  is  13  cents.  If  the  copper  in  the  ore  will  only  average  87.5 
Ib.,  as  would  seem  to  be  much  more  probable,  the  cost  per  pound 
will  be  15.57  cents. 

The  report,  however,  states  that  the  cost  is  11.55  cents.  Now 
if  this  is  so  we  must  calculate  that  the  output  coming  from  225,227 
tons  of  ore  was  mined  and  treated  at  a  cost  of  $3,579,948,  which 
equals  $15.90  a  ton.  If  we  divide  this  by  11.55  we  get  128  Ib. 
per  ton.  But  the  report  distinctly  states  that  the  ore  only 
yielded  103  Ib.,  to  which  I  add  2  Ib.  to  get  the  equivalent  in 
copper  alone,  making  it  105.  There  is  a  serious  error  in  the 
report  somewhere.  If  my  interpretation  of  the  costs  is  correct, 
the  mine  is  not  making  any  money. 


CHAPTER  XI 
VARIOUS  COPPER  MINES   OF  ARIZONA  AND   MEXICO 

Clifton  —  Morenci  district  —  Arizona  Copper  Company  —  Shannon  Copper 
Company  —  Detroit  Copper  Company  —  Miami  Copper  Company  in 
Globe  district  —  Bisbee  district  —  Copper  Queen  —  Calumet  &  Arizona 
—  Superior  &  Pittsburg  —  Greene  Consolidated  —  Moctezuma  Copper 
Company. 

IN  1907  Arizona  became  the  leading  producer  of  copper  in 
the  United  States.  Unlike  Michigan  and  Montana,  each  of  which 
has  but  a  single  district,  Arizona  contains  the  four  important  and 
distinct  districts  of  Bisbee,  Globe,  Clifton,  and  Jerome,  all 
differing  markedly  in  character  and,  therefore,  in  costs. 

The  external  factors  are  uniform  and  unfavorable.  The 
situation  of  the  mines  in  an  arid  plateau  poorly  supplied  with 
water,  fuel,  timber,  and  population,  with  freight  rates  inevitably 
high,  makes  for  high  costs.  Wages  of  white  miners  are  $3.50  a 
shift  of  eight  hours;  Mexicans  are  paid  $2.50  a  shift.  The  sum- 
mer heats  are  debilitating  and  the  energy  of  the  men  is  somewhat 
less  than  it  would  be  farther  north.  This  is  true  particularly  in 
regard  to  metallurgical  work. 

The  internal  factors  vary  with  each  district.  These  will  be 
described  separately. 

CLIFTON-MORENCI  DISTRICT 

The  Clifton-Morenci  district  produces  prophyry  ore  in  which 
chalcocite  is  disseminated.  In  this  respect  the  orebodies  re- 
semble the  deposits  of  Bingham,  Utah,  and  of  Ely,  Nev.  The  ores 
form  large  irregular  bodies  at  depths  of  from  100  to  300  ft.  below 
the  surface.  In  this  respect  the  ore  is  easy  to  mine.  But  there 
is  a  certain  irregularity,  not  only  in  the  orebodies  as  a  whole, 
but  also  in  their  internal  make-up.  A  certain  amount  of  sorting 
may  be  done  to  advantage  in  the  mines.  The  ore  is  fairly  hard 
and  firm  and  is  taken  out  by  square-setting.  Mexican  miners 
with  white  bosses  are  employed. 

177 


178 


THE  COST   OF  MINING 


Costs  are  not  generally  stated  in  detail,  but  the  reports  of 
the  Shannon  and  Arizona  copper  companies  make  plain  the 
following  facts: 


About  1  ft.  of  opening  work  is  necessary  to  find  and  develop 
15  tons  of  ore.  The  cost  of  this  work  is  stated  to  be  21  to  33 
cents  a  ton  (Shannon).  Stoping  costs  are  about  $2  to  $2.80  a 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO       179 

ton.     Details   for   one    year   are    shown    in    an    accompanying 
table. 

The  Arizona  Copper  Company  gives  its  costs  for  mining, 
including  deadwork,  ores  purchased,  and  leaching,  as  follows: 

1904,  $2.81;  1905,  $2.46;  1906,  $2.50.     It  seems  fair  to  assume 
from  this  that  the  underground  costs  are  substantially  the  same 
as  the  Shannon.     The  same  may  be  said  of  the  Detroit  Copper 
Company. 

Assuming  that  the  cost  of  mining,  including  development,  is 
$2.25  to  $2.50  a  ton,  and  that  out  of  this  cost  about  50  cents  is 
due  to  timbering,  it  seems  fair  to  say  that  the  excess  over  Lake 
Superior  costs  is  due  to  the  external  factors. 

The  internal  factors  that  govern  the  cost  of  treatment  are  the 
losses  due  to  concentrating,  the  proportion  of  concentrates  to 
the  crude  ore  and  the  smelting  qualities  of  the  ore. 

(1)  The  Shannon  Copper  Company  reports  for  1904  a  saving 
of  75  per  cent,  on  ore  averaging  4.16  per  cent.;  in  1905,  73  per 
cent,  on  ore  running  3.77  per  cent.,  and  in  1906,  69  per  cent,  on 
ore  averaging  3.36  per  cent.       This  saving  is  for  both  smelting 
and  concentrating. 

(2)  The  Shannon  Copper  Company  smelted  in  1905,  44  per 
cent,  of  its  total  output;   in  1906,  44^  per  cent.;  in  1907,  56  per 
cent.     The  Arizona  Copper  Company  smelted  in  1904,  22  per  cent, 
of  its  total  output;  in  1905,  20  per  cent.;  in  1906,  20  per  cent. 

The  costs  for  concentrating,  smelting,  refining,  and  marketing 
are  not  given  in  detail,  but  in  the  case  of  the  Arizona  Copper 
Company  these  costs  lumped  together  were,  in  1904,  $1.90;  in 

1905,  $1.93;  in  1906,  $2.06,  the  costs  being  based  on  the  entire 
tonnage  sent  from  the  mine.     If  the   cost  of  concentrating  is 
75  cents  a  ton,  including  transportation  from  the  mines,  the  cost 
for  smelting,  refining,  and  marketing  would  appear  to  be  about 
$6  per  ton  smelted.     On  this  basis  the  cost  to  the  Shannon  com- 
pany, on  account  of  the  larger  proportion  smelted,  should  be 
$1.80  higher  than  to  the  Arizona  company.     This  seems  to  be 
approximately  the  case. 

(3)  Certain  difficulties  have  been  experienced  in  smelting  on 
account  of  a  deficiency  of  sulphur  for  matting  purposes.     This 
is  particularly  the  case  with  the  first-class  ores.     In  the  earlier 
days  this    difficulty  added  more   to   the    cost   than  it  does  at 
present. 


180  THE  COST  OF  MINING 

SUMMARY  OF  OPERATIONS,  ARIZONA  COPPER  COMPANY 


1904 

1905 

1906 

Total  ore  (tons)  .... 
Total  copper  (Ib.) 
First-class  ore  (tons) 
Concentrating        ore 
(tons)    
Copper  per  ton  (Ib.) 
Tons  smelted  
Tons  leached    
Copper  from  leaching 
(Ib.) 

491,600 
28,732,800 
31,695 

460,000 
57.5 
102,893 
80,100 

2,824,000 

547,000 
30,080,000 
26,000 

521,000 
56.3 
108,000 
90,000 

2,470,000 

610,000 
29,756,000 
31,378 

578,517 
48.8 
121,507 
80,000 

2,126,000 

Copper  per  ton  from 
leaching  (Ib.)  .... 

Cost   working   mines 
(deadwork,       ores 
purchased,     leach- 
ins:  etc  ) 

35.3 

Per  Ton 

£285,056     $2.81 

26.3 

Per  Ton 

£276,326     $246 

26.7 

Per  Ton 

£  373  560     $2  50 

Smelting,  refining, 
and  marketing  .  .  . 
General  

£194,077       1.90 
£14,286       0.14 

£215,846       1.93 
£14,430       0.13 

£258,506       2.06 
£15,579       0.14 

Interest  and  amorti- 
zation     

£49,162       0.49 

£58,965       0.52 

£88,765       0.70 

Cost  per  Ib.   at  New 
York  

$5.34 
9.3  cents 

$5.04 
8.93  cents 

$5.40 
11.07  cents 

SUMMARY  OF  OPERATIONS,  SHANNON  COPPER  COMPANY 


1903-4 

1904-5 

1905-6 

1906-7 

Smelting  ore  (tons)    

66,005 

53,340 

69,342 

Mill  ore  (tons) 

91,311 

135,503 

140,683 

Total        .  .                

157  316 

188  843 

210,025 

209,654 

Per  cent,  copper,  smelted  ore  .... 
Per  cent,  copper,  mill    

5.28 
3.34 

4.70 
3.41 

4.37 
2.86 

Per  cent,  copper,  average  
Copper,  Ib.  saved  per  ton  
Per  cent,  saving  
Feet  development                

4.16 
62.34 
75.0 

3.77 
55.03 
73.0 
11,931 

3.36 
46.41 
69.0 
14,740 

47.6 
14,610 

VARIOUS   COPPER  MINES   OF  ARIZONA  AND  MEXICO        181 


SUMMARY  OF  OPERATIONS,  SHANNON  COPPER  COMPANY  —  Continued 


Cost  per  Ton 

Cost  per  Ton 

Cost  per  Ton 

Operating  mines,  mills,  and  smelters  . 
Exploration  and.  development 

$6.04 
0.21 

$6.91 
0.30 

$6.20 
033 

Freight  refining,  etc  

0.90 

0.70 

0.65 

General  expense 

0.39 

0.28 

0.30 

Outside  developments  etc  

$7.54 
1.08 

$8.19 
0.75 

$7.48 
0.70 

Total                 

$8.62 

$8.94 

$8.18 

Cost  per  Ib  at  New  York          .    . 

13.7  cents 

17.6  cents 

15  7  cents 

Stoping  cost  per  ton  $1.92. 

SHANNON  COPPER  COMPANY,  MINING  COSTS,  1904-5 


Total  Cost 

Cost  per  Ton 

Assaying  and  sampling                     

$6,226.70 

$0048 

Executive  and  office  expense  

10,519.33 

0.055 

Taxes  insurance  and  hospital  

3,251.33 

0017 

Incline                                                  ... 

6,099  33 

0032 

Extraction 

176  124  71 

0  932 

Timbering  and  framing     

94,769.75 

0.501 

Filling                                                  .    . 

10,749  47 

0  056 

Tramm  in0* 

21  234  72 

0  112 

Tracklaying    .                    

9,193.13 

0.048 

Handling  supplies 

8  411  72 

0044 

Miscellaneous 

13  032  10 

0069 

Total  operating  expense 

$362  662  29 

$1  92 

Development  

23,600.68 

0.124 

Exploration  

17  609  68 

0093 

Total  mining  cost 

$403  872  65 

$2  138 

Ore  received,  188,856  tons. 

182 


THE  COST  OF  MINING 


SHANNON  COPPER  COMPANY  —  REPORTED  COSTS  OF  COPPER  PER  POUND 


.  1906 

1907 

1908 

Expense  for 
11,017,000 
Pound's  Copper 

Cost  of 
Copper 
Per 
Pound 

Expense  for 
13,593,000 
Pounds  Copper 

Cost  of 
Copper 
Per 
Pound 

Expense  for 
16,408,000 
Pounds  Copper 

Cost  of 
Copper 
Per 
Pound 

Operation  

$1,431,513 

$.1299 

$2,115,192 

$.1556 

$1,953,251 

$.1129 

Development     and 

exploration    .... 

60,188 

.0055 

67,491 

.0050 

31,120 

.0018 

Freight,       refining, 

etc  

147,704 

.0134 

179,462 

.0132 

216,050 

.0132 

Interest  and  taxes  . 

39,052 

.0035 

42,534 

.0031 

29,627 

.0018 

General  expense.  .  . 

17,204 

.0015 

19,675 

.0014 

27,115 

.0016 

Total  

1,695,661 

.1539 

2,424,354 

.1783 

2,257,163 

.1375 

Deduct    gold     and 

silver  profits    .  .  . 

— 

0028 

— 

.0067 

— 

.0064 

Net  cost  



.1511 



.1716 

— 

.1311 

Average  net  cost  during  last  three  years,  15.13  cents. 

The  above  costs  contain  no  estimate  of  depreciation  or  amor- 
tization, therefore  the  selling  cost  must  be  a  good  deal  higher 
than  those  given,  but  I  have  not  attempted  to  compute  them. 
It  is  to  be  noted  further  that  these  costs  do  not  correspond  to 
those  in  the  table  above,  because  they  do  not  include  exactly 
the  same  items. 

MIAMI  COPPER  COMPANY 

The  following  prospectus  was  issued  in  March,  1908: 
"The  property  of  the  Miami  Copper  Company   consists   of 
about  300  acres,  200  of  which  is  mineral  land,  located  six  miles 
west  of  the  city  of  Globe,  Arizona,  at  which  city  are  the  mines 
and  works  of  the  well-known  Old  Dominion  Company. 

"Development  which  is  still  being  carried  on  shows  to  date 
2,000,000  tons  of  concentrating  ore  containing  3  per  cent,  of 
copper.  Ore  was  struck  at  a  depth  of  220  ft.,  and  the  bottom 
of  the  shaft,  at  a  depth  of  500  ft.,  is  still  in  ore,  and  the  area 
shown  of  the  ore  body  is  300  ft.  by  350  ft.,  without  having  as 
yet  reached  the  limits,  so  that  the  prospects  are  that  an  enor- 
mous body  of  concentrating  ore  will  be  developed  as  indicated 
by  surface  conditions. 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND   MEXICO       183 

"  The  Gila  Valley  Globe  &  Northern  Railway  ends  at  Globe, 
six  miles  distant,  and  surveys  past  the  Miami  have  been  made 
and  right  of  way  secured;  this  extension  will  pass  within  a  quar- 
ter of  a  mile  of  the  mine.  There  is  abundant  water  available 
for  concentration  purposes. 

"It  is  proposed  to  erect  the  first  unit  of  a  reduction  works, 
which  unit  will  have  a  daily  capacity  of  1,000  tons.  This  will 
give  an  annual  production  of  14,000,000  Ib.  of  copper,  based  on 
350  days  running  time  and  a  yield  from  the  3  per  cent,  ore  of 
2  per  cent.,  or  40  Ib.  of  copper  to  the  ton. 

Concentrating  tests  have  shown  that  the  ore  can  be  readily 
concentrated  10  into  1  and  the  resulting  concentrate  smelted 
with  the  above  yield  in  fine  copper.  It  is  estimated  that  the 
cost  of  electrolytic  copper  sold  in  New  York  will  be  9  cents 
per  pound.  On  this  basis  the  profits  at  12  cents  copper  will 
be  $420,000  per  annum,  and  at  15  cents  copper  $840,000  per 
annum.  As  developments  advance  a  second  unit  of  1,000  tons 
daily  capacity  will  be  built  which  will  double  the  above  figures 
of  profit. 

"It  is  estimated  that  it  will  require  $750,000  to  erect  the 
necessary  first  unit  of  the  reduction  works  and  that  $250,000 
additional  will  be  required  for  mine  plant,  shops,  buildings, 
etc. 

"  The  ore  deposit  of  the  Miami  Copper  Company  is  in  nature 
similar  to  those  of  the  Arizona  Copper  Company,  the  Nevada 
Consolidated  Copper  Company,  the  Utah  Copper  Company,  and 
the  Boston  Consoldiated  Mining  Company;  that  is,  large  masses 
of  ore  in  which  the  copper  as  a  sulphide  mineral  is  disseminated 
through  the  rock  and  which  readily  yields  a  high-grade  concen- 
trate by  water  treatment,  which  can  be  easily  smelted. 

"  The  mining  is  simple  and  cheap  and  when  found  these  deposits 
are  the  most  valuable  as  copper  producers.  The  Miami  ore, 
running  3  per  cent,  in  copper  as  it  does,  is  higher  in  grade  than 
any  of  the  above-mentioned  properties  and  it  will  without  doubt 
prove  a  large  producer  and  dividend  payer." 

During  the  year  which  has  elapsed  since  this  was  issued  all 
hopes  have  been  far  exceeded.  There  are  now  13,300,000  tons 
of  ore  in  sight  and  the  company  is  erecting  a  plant  of  2,000  tons 
daily  capacity  which  is  twice  the  original  plan.  It  is  hoped 
that  this  plant  will  begin  operations  in  the  summer  of  1910. 


184 


THE  COST  OF  MINING 


BISBEE  DISTRICT 

In  the  Bisbee,  or  Warren,  district,  the  internal  conditions 
are  essentially  different  from  those  of  Clifton.  This  fact  is  suffi- 
ciently reflected  by  the  mining  costs  which  are  at  Bisbee  $6  a 
ton  against  $2.50  or  less  at  Clifton.  Dr.  James  Douglas  describes 
the  Copper  Queen  mine  in  a  paper  in  Vol.  XXIX,  1899,  Trans- 
actions of  the  A.  I.  M.  E.  The  ore  yielded,  "  about  7  per  cent. 
copper  after  a  rough  selection  in  the  stopes  where  about  one- 
half  the  total  material  broken  is  rejected.  To  supplement  the 
deficiency  in  filling  the  stopes,  barren  ledge  matter  from  explora- 


Setfion  A-B 


SecliouC-D 


^ 
ction  C-D 


«*>  r«t 


FIG.  7.  —  Sketch  showing  arrangement  of  orebodies,  in  Bisbee,  Arizona  where 

1  foot  of  development  work  opens  11  tons  of  ore. 
v 

tory  drifts  is  used.  Though  the  timbering  of  worked-out  por- 
tions of  the  mine  is  thus  enforced,  so  violent  is  the  movement 
of  the  ground  that  the  timbers  are  dislocated  or  crushed  to  chips.  ] 
About  30  ft.  board  measure  of  timber  (from  Puget  Sound)  is 
buried  in  the  mine  to  the  ton  of  ore  extracted."  This  is  a  ter- 
rific cost  for  timber.  At  an  average  price  of  $24  per  M.  delivered 
at  the  mine,  we  have  on  this  basis  75  cents  a  ton  for  timber 
alone.  From  7  to  10  tons  of  ore  are  extracted  per  foot  of  opening 
work.  A  large  part  of  the  exploratory  openings  have  to  be 
closely  timbered,  and  the  cost  for  this  work  is  high. 

The   reason   for   the   conditions   described   will   appear   very 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO        185 


plainly  from  a  consideration  of  the  structural  relations  of  the 
orebodies.  Dr.  Douglas  says:  "With  regard  to  ledge  matter 
and  the  oxidized  ore,  my  own  opinion  is  that  they  are  the  pro- 
duct of  replacement  and  local  concentration;  that  where  there 
is  ledge  matter  to-day  there  was,  originally,  more  or  less  com- 
pact iron  pyrites  carrying  a  small  percentage  of  copper;  and  that 
during  the  process  of  alteration  not  only  did  the  ferruginous 
solutions  of  alumina  replace  the  pyrites,  but  the  copper,  by  a 
process  of  segregation  akin  to  crystallization,  was  concentrated 
and  collected  into  areas  of  limited  size,  thus  constituting  the  com- 
paratively small  bodies  of  oxidized  ores  which  are  disseminated 
irregularly  through  the  very  large  masses  of  ledge  matter.  As 
the  outline  of  the  masses  of  ledge  matter  has  never  been  traced, 
it  is  impossible  to  determine  their  actual  size,  but  approximately 
there  has  been  exposed  above  the  400-ft.  level  not  less  than  10,- 
000,000  tons  of  ledge  matter."  Since  at  the  time  this  was  writ- 
ten not  much  over  1,000,000  tons  of  ore  had  been  mined  above 
the  400-ft.  level,  it  is  probable  that  Dr.  Douglas  believes  that 
the  ores  now  occupy  approximately  one-tenth  of  their  original 
volume;  the  remaining  nine-tenths  being  now  " ledge  matter," 
mainly  ferruginous  clay. 

Nothing  could  be  clearer  than  the  above  description  as  an 
explanation  of  the  cost  factors.  All  the  altered  residual  masses 
must  be  explored;  this  means  that  the  mine  development,  in 
addition  to  the  shafts  and  drifts  necessary  to  reach  the  ore,  must 
search  through  10  cu.  ft.  of  difficult  mining  ground  for  every 
cubic  foot  to  be  extracted. 

At  various  places  in  the  mines  large  masses,  like  kernels,  of 
original  pyrites,  still  exist,  surrounded  on  all  sides  by  the  "  ledge 
matter."  Although  workable  ore  is  found  along  the  periphery 
of  these  masses,  the  pyrite  itself  is  not  payable.  No  concen- 
trating ore  has  yet  been  found  in  the  district.  All  the  ore  raised 
from  the  mines  must  be  smelted,  consequently  it  must  be  selected 
as  much  as  possible. 

To  sum  up  —  there  are  in  these  mines  three  powerful  factors 
that  make  for  high  costs:  (1)  A  very  large  proportion  of  develop- 
ment work;  (2)  soft  ground,  requiring  slow,  cautious  working 
and  heavy  timbering;  (3)  careful  selection  imposed  by  the  neces- 
sity of  smelting  the  whole  product,  thus  imposing  a  high  sub- 
sequent metallurgical  cost.  This  is  the  most  imperative  factor 


186 


THE    COST    OF    MINING 


of  all,  for  it  can  be  shown  that  in  this  case  lower  costs  at  the 
expense  of  having  to  smelt  lower  grade  ores  might  result  in  fright- 
ful losses  of  profits.  To  mine  4  per  cent,  ore  for  $3  a  ton  against 
7  per  cent,  ore  at  $6  a  ton,  smelting  costs  remaining  the  same, 
would  increase  the  cost  of  copper  about  0.82  cents  a  pound,  or 
$16.40  a  ton. 

The  Copper  Queen  mine,  .unfortunately,  does  not  publish 
its  reports,  and  the  Calumet  &  Arizona,  the  only  other  impor- 
tant mine  at  Bisbee,  does  not  give  details.  The  figures  from  the 
Calumet  &  Arizona  reports  in  an  accompanying  table  throw 
some  light  on  the  subject: 

SUMMARY  OF  OPERATIONS  OF  CALUMET  &  ARIZONA  FOR  FIVE  YEARS 


Year 

Copper 

Price 

Value 
Copper 

Gold  and 
Silver 

Total 
Value 

Tons 

1904  
1905 

31,638,660 
31,772,896 

12.562 
14.923 

3,974,448 
4,741,484 

$195,926 

178,843 

$4,170,374 
4,920  327 

205,807 
202  952 

1906  
1907 

37,470,284 
30,689,448 

17.96 
18.103 

6,729,612 
5,554,781 

238,464 
210,846 

6,968,076 
5,765,627 

215,671 
232,460 

1908  

28,048,329 

12.948 

3,631,655 

234,358 

3,866,013 

265,344 

Total  &Av. 

159,619,617 

24,631,978 

$25,690,417 

1,122,234 

Year 

Devel. 
Ft. 

Div. 

*  Excess  of  Assets 

No.  of 
Men 
Mining 

Estimated  Cost 
of  Mining 
Per  Ton 

1904  
1905  

19,955 
21,737 

1,300,000 
1,700,000 

1,823,992 

583 
629 

$6.15 
6.68 

1906  
1907  
1908  

14,818 
23,016 
30,680 

2,600,000 
3,300,000 
800,000 

3,423,269 

597 
621 
567 

6.00 
5.70 
4.60 

100,206 

9,700,000 

Copper  equivalent 

Copper  equivalent  per  ton 

Approximate  earnings 

Approximate  cost    

Cost  per  ton    

Cost  per  Ib.  copper 

Tons  per  ft.,  development  work 


.  166,500,000  Ib. 

148  Ib. 

...  $10,900,000 
.  . .  $14,790,000 

$13.18 

8.9  cents 

..11 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO       187 

The  first  report  that  gives  actual  operating  figures  to  any 
extent  is  that  for  the  year  1908.  The  comparison,  with  the 
five-year  period  is  interesting.  The  amount  smelted  was  265,344 
tons  containing  the  equivalent  of  113  Ib.  per  ton,  against  148 
for  the  five  years. 

Per  Ton 

Operating  mines  and  smelters $2,089,158  $7.87 

Current  construction 195,408  .74 

Salaries  and  general  expense 32,011  .12 

Refining  and  marketing    368,529  1.39 

Ore  purchases 22,964  .08 

Total    $2,708,070         $10.20 

The  cost  per  pound  copper  is  9  cents. 

There  is  nothing  to  indicate  the  comparative  cost  of  mining 
and  of  smelting  except  the  number  of  men  employed  in  each. 
The  total  number  at  the  mines  averaged  567,  and  at  the  smelter, 
484.  It  seems  probable  that  the  total  cost  of  mining  will  equal 
$6  a  day  per  man  employed,  this  being  estimated  on  the  theory 
that  the  labor  cost  is  60  per  cent,  of  the  total,  which  would  indi- 
cate a  mining  cost,  including  development  and  everything,  of 
$4.60  a  ton.  This  cost  is  good  for  Bisbee  and  I  believe  below 
the  average  at  this  mine.  Smelting  would  cost,  on  this  basis, 
$3.18  per  ton,  which  seems  very  good. 

SUPERIOR  AND  PITTSBURGH 

This  property  is  a  consolidation  of  several  others  which 
undertook  a  bold  and  expensive  exploration  of  a  tract  of  1388 
acres  lying  in  the  trend  of  the  assumed  extension  of  the  copper 
Queen  orebodies.  The  venture  has  been  successful  as  far  as 
finding  ore  is  concerned,  but  has  not  yet  become  profitable. 
It  is  heavily  capitalized,  the  stock  issued  being  1,500,000 
shares  at  $10  par  value.  That'  the  outcome  is  viewed  with 
confidence  by  the  stockholders,  or  by  the  public,  is  proved  by 
the  present  market  value  (April,  1909)  for  the  stock  of  $13  a 
share. 

Operations  have  been  carried  on  since  the  consolidation  at 
a  loss  of  $1,031,284  in  three  years.  The  output  and  results  have 
been  as  follows: 


188 


THE  COST   OF  MINING 


19— 

Dry  Tons 
Smelted 

Feet 
Development 

Copper 

Gold  and 
Silver 

Total  Value 

1906  
1907  

95,779 
111,710 

40,019 
23,332 

9,044,875 
9,691,905 

$21,941 
33,401 

$1,645,339 
1,787,544 

1908  

214,847 

29,572 

21,924,259 

121,296 

2,839,000 

422,336 

92,923 

40,660,539 

176,638 

$6,271,883 

The  equivalent  of  copper  per  ton  is  100  Ib.  The  cost  per  ton 
averages  $17.30,  and  the  cost  per  pound  copper  17.3  cents.  Tons 
per  foot  development,  4J. 

A  great  improvement  over  these  averages  is  shown  by  the 
report  for  1908.  The  copper  equivalent  in  the  ore  for  that  year 
is  108  Ib.,  nearly  equal  to  Calumet  &  Arizona  for  the  same  year. 
Here  is  the  record : 


Tons  smelted  dry 

Mining  and  smelting 

Current  construction  .... 
Salaries  and  general 


Refining  and  marketing    264,869 

Interest 84,719 


The  cost  per  pound  was  12.54  cents. 


Per  Ton 

$11.60 
.14 
.17 
1.23 
.40 

$2,908,031          $13.54 


214,847 

$2,490,857 

30,938 

36,648 


PHELPS,  DODGE  AND  COMPANY 

A  prospectus  issued  in  December,  1908,  announcing  the 
incorporation  of  the  various  properties  owned  by  this  concern, 
contains  all  the  official  information  issued  to  the  public  about 
them,  and  is  given  in  following  pages  verbatim,  so  far  as  it 
relates  to  the  copper  mines.  The  prospectus  interrupts  to  some 
extent  the  policy  of  secrecy  heretofore  maintained  concerning 
the  mines,  but  it  gives  no  operating  details.  It  is  not  possible, 
therefore,  to  calculate  the  costs  with  assurance.  It  is  only  pos- 
sible to  make  some  comments  on  the  data  furnished  in  order  to 
apply  to  some  extent  the  argument  developed  throughout  this 
volume,  as  to  the  relation  of  capital  charges  to  operating  charges 
and  profits. 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO       189 

STATEMENT  BY  COMPTROLLER 

COPPER  QUEEN  CONSOLIDATED  MINING  COMPANY 

"This  property  consists  of  one  hundred  and  thirty-five  (135) 
mining  claims  in  the  Warren  mining  district,  Cochise  County, 
near  the  town  of  Bisbee,  Arizona,  a  large  smelting  plant  at  Doug- 
las, of  a  capacity  of  3000  tons  a  day,  which  treats  the  product  of 
the  mines  of  the  Copper  Queen  Company,  and  for  the  time  being 
the  ores  of  the  Moctezuma  Copper  Company,  and  does  general 
custom  work.  The  company  conducts  a  mercantile  business, 
and  has  large  stores  and  warehouses  in  Bisbee  and  Douglas,  and 
a  branch  store  in  Waco,  Arizona,  as  well  as  other  pieces  of  real 
estate.  It  also  owns  mining  interests  in  other  localities. 

"For  five  years  past  the  production  of  the  mines  has  been  as 
follows : 

1903  37,257,470  Ib. 

1904  50,151,552  Ib. 

1905 64,625,955  Ib. 

1906  79,219,655  Ib. 

1907  63,341,055  Ib. 


Total    294,595,687  Ib. 

"The  output  of  the  Douglas  Reduction  Works,  including  pur- 
chased and  custom  ores,  for  five  years  past  has  been  363,121,911 
Ibs. 

"The  earnings  of  the  company  during  the  five  years  past  have 
been  as  follows: 

1903  $2,201,640.40 

1904  2,960,659.70 

1905  5,609,486.30 

1906  7,625,854.76 

1907  4,471,137.08 


Total    $22,868,778.24 

"The  difference  between  earnings  and  dividends  is  repre- 
sented by  expenditure  on  increased  plant  facilities,  and  undis- 
tributed assets,  consisting  of  the  larger  stock  of  coke  and  fuel 
necessitated  by  increased  operations;  and  the  accumulated  stock 
of  ores  at  the  works,  amounting  in  value  to  over  $1,000,000,  as 
well  as  by  increased  cash  and  increased  reserves. 


190  THE  COST  OF  MINING 

"A  large  portion  of  the  company's  mining  property  has  as 
yet  been  undeveloped,  though  situated  within  the  recognized 
mineral  zone  of  the  district,  and,  owing  to  the  difficulty  of  hold- 
ing up  the  soft,  shifting  ground  in  which  the  ore  occurs,  it  has 
always  been  found  impossible  to  block  out  ore  reserves  as  large 
as  mines  of  such  capacity  elsewhere  have  usually  maintained,  as 
nominally  in  sight.  There  is,  however,  at  the  present  time  as 
much  ore  in  sight  as  at  any  other  period  of  the  mine's  history. 

"The  valuation  of  the  company's  property  as  of  November  1, 
1908,  exclusive  of  the  mines,  is  as  follows : 

Invested  in  plant $4,974,866.77 

Other  assets    10,915,492.97 

Liabilities    1,275,573.40 

MOCTEZUMA    COPPER    COMPANY 

"This  property  consists  of  about  2500  acres  of  mineral  ground 
in  the  State  of  Sonora,  Mexico,  on  which  has  been  opened  the 
Pilares  mine.  This  is  in  a  mineralized  body,  oval  in  shape,  and 
which  retains  approximately  its  dimensions  between  surface 
and  the  seven  hundred  foot  level.  It  is  about  1700  ft.  in  diam- 
eter from  north  to  south,  and  1200  ft.  in  diameter  from  east  to 
west,  and  contains  a  large  area  of  profitable  ore.  A  narrow  gage 
steam  railroad  five  miles  in  length  connects  the  mine  through 
the  Pilares  Tunnel  with  the  concentrating  mill  at  the  town  of 
Nacozari.  The  tunnel  itself,  with  its  branches,  is  over  a  mile 
in  length,  and  is  large  enough  to  allow  of  the  railroad  cars  reach- 
ing through  it  the  different  sections  of  the  mines,  and  receiving 
their  charge  from  large  bins  excavated  out  of  the  ore.  These 
bins  are  of  a  capacity  of  several  thousand  tons  each,  and  are 
fed  through  chutes  extending  to  the  surface  levels,  the  chutes 
also  being  excavated  from  the  mineralized  ground. 

11  The  quantity  of  what  may  be  considered  ore  depends  entirely 
upon  the  grade  which  it  is  profitable  at  a  given  price  for  copper 
to  work,  but  the  mine  is  at  present  opened  up  for  an  extrac- 
tion of  1500  to  2000  tons  a  day  of  ore  of  an  average  grade  of 
three  per  cent.  The  daily  capacity  of  the  concentrating  mill 
just  completed  at  Nacozari  is  2000  tons.  At  Nacozari  is  a  well- 
designed  power  plant,  equipped  with  Curtis  turbines  of  over  4000 
horse-power,  for  transmitting  high  voltage  current  to  both  the 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO        191 

mill  and  the  mine.  For  the  time  being  it  is  found  to  be  more 
profitable  to  convey  the  concentrates  and  rich  ores  by  the  Naco- 
zari  Railroad  to  Douglas,  Arizona,  seventy  miles  distant,  than 
to  smelt  them  on  the  spot,  the  ores  being  treated  at  Douglas  at 
the  same  profit  to  the  Copper  Queen  Company  as  though  they 
were  custom  ores  supplied  by  an  unallied  customer.  This  fea- 
ture of  the  company's  operations  explains  the  comparatively 
small  quantity  of  supplies  carried  by  the  Moctezuma  Copper 
Company  as  compared  with  the  other  companies. 

"The  old  concentrating  mill,  which  is  still  intact,  with  its  very 
efficient  gas  engine  and  gas-generating  plant,  which  up  to  within 
a  few  months  treated  600  tons  of  ore  a  day,  is  now  out  of  com- 
mission, though  it  can  be  started  at  short  notice  as  a  supple- 
mental plant  to  the  new  mill,  should  this  course  be  desirable. 

"  The  production  for  the  five  years  past  has  been  as  follows : 

1903  10,281,970  Ib. 

1904  11,061,649  Ib. 

1905  10,160,016  Ib. 

1906  12,714,726  Ib. 

1907  9,640,390  Ib. 


Total    53,858,751  Ib. 

"The  increased  capacity  of  both  the  mine  and  the  concen- 
trating mill,  owing  to  recent  improvements,  is  indicated  by  the 
fact  that  in  May,  1908,  the  production  was  784,892  Ib.  of  metallic 
copper,  whereas  by  the  month  of  October  it  had  reached  2,300,000 
Ib.  of  copper,  contained  in  9500  tons  of  12^  per  cent,  concen- 
trates. A  production  of  approximately  two  million  pounds  of 
copper  a  month  can  now  be  maintained;  and,  if  the  market 
demanded  it,  this  production  could  be  increased  to  three  million 
pounds  per  month. 

"The  net  earnings  for  the  five  years  past,  while  the  mine  was 
still  in  a  stage  of  development  and  the  works  were  contracted, 
were  as  follows  : 

1903 .       $456,524.55 

1904  598,992.36 

1905  533,117.66 

1906  1,195,424.18 

1907  833,236.25 


Total    $3,617,295.00 


192  THE  COST   OF   MINING 

"The  company  has  built  and  owns  the  whole  town  of  Nacozari, 
and  has  provided  it  with  a  well-furnished  library  and  amusement 
hall,  a  thoroughly  equipped  hospital,  hotel,  boarding  houses, 
and  schools.  At  the  Pilares  mine  the  company  has  provided 
its  workmen  with  comfortable  houses  and  supports  a  school.  At 
both  Nacozari  and  Pilares  the  company  has  large  stores  and 
warehouses,  and  conducts  a  profitable  mercantile  business. 

'•The  valuation  of  the  company's  property  as  of  November  1, 
1908,  exclusive  of  the  mines,  is  as  follows: 

Invested  in  plant $3,046,384.32 

Other  assets    944,663.08 

Liabilities    347,221.22 

THE    DETROIT    COPPER    MINING    COMPANY    OF   ARIZONA 

"The  mines  of  this  company  are  situated  in  the  Clifton  dis- 
trict, Arizona,  in  the  same  beds  of  felspathic  rock  which  at  the 
present  time  are  yielding  the  product  of  the  Arizona  Copper 
Company,  the  Shannon  Copper  Company,  and  certain  less  prom- 
inent organizations.  The  property  owned  by  the  company 
consists  of  one  hundred  and  forty-five  (145)  mining  claims,  and 
the  ore  now  extracted  amounts  to  about  36,000  tons  per  month, 
yielding  about  three  per  cent,  of  copper.  •  The  bulk  of  the  ore 
is  concentrated  mechanically  to  a  grade  of  about  fifteen  per  cent., 
and  smelted  at  Morenci  in  the  company's  own  smelting  works. 

"The  company's  production  for  the  five  years  past  has  been 
as  follows : 

1903  16,869,300  Ib. 

1904  16,424,394  Ib. 

1905  14,632,117  Ib. 

1906  20,347,497  Ib. 

1907  .  .    17,974,581  Ib. 


Total    86,247,889  Ib. 

"The  production  for  the  eleven  months  of  the  present  year  has 
increased  to  21,500,000,  owing  in  great  measure  to  improved 
facilities  for  treatment.  The  future  production  with  the  present 
equipment  can  be  maintained  at  approximately  two  million  pounds 
of  copper  per  month. 

"The  earnings  during  the  past  five  years  have  been  as  follows: 


> 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO        193 
1903  .  $543,456.00 


1904 
1905 
1906 
1907 


603,340.00 
532,634.28 
973,456.42 
814,874.11 


Total  $3,467,810.81 

"  The  company  runs  a  large  store  and  hotel,  and  owns  consid- 
erable other  property  in  the  town  of  Morenci,  besides  a  powerful 
pumping  plant  on  the  San  Francisco  River  seven  miles  distant. 

"  The  valuation  of  the  company's  property  as  of  November 


1,  1908,  exclusive  of  the  mines,  is  as  follows: 


Invested  in  plant  .  . 

Other  assets    

Liabilities    . 


$2,158,106.00 

2,934,465.97 

149,878.48 


"  The  ores  from  the  Copper  Queen  mines  carry  about  twice 
the  quantity  of  copper  contained  in  those  of  the  Nacozari  and 
Morenci  districts,  but  this  advantage  is  offset  by  the  higher 
cost  of  mining  the  Queen  ore,  owing  to  the  character  of  the  de- 
posits in  which  they  occur.  Moreover,  as  the  Queen  ores  cannot 
be  subjected  to  preliminary  mechanical  concentration,  which 
raises  the  smelting  grade  of  the  Nacozari  and  Morenci  ores,  they 
must  be  subjected  to  furnace  treatment  as  they  come  from  the 
mines;  hence  the  cost  of  smelting  a  ton  of  Queen  ore  is  higher 
than  the  cost  calculated  on  a  ton  of  crude  Nacozari  or  Morenci 
ore,  as  it  comes  from  the  mine  previous  to  mechanical  concen- 
tration. " 

Referring  to  the  Copper  Queen  and  confining  attention  to 
the  output  from  the  company's  own  mines  we  get  the  following: 


Year 

Output 
Pounds 

Operating  Profits 
Dollars 

Profits  per 
Pound 
Cents 

Average 
Price 
Cents 

Cost 
Cents 

1903 

37,257,470 

2,201,640 

5.9 

12.6 

6.7 

1904  

50,151,552 

2,960,659 

5.9 

12.562 

6.962 

1905  

64,625,955 

5,609,486 

8.7 

14.923 

6.223 

1906    

79,219.655 

7,625,854 

9.63 

17.96 

8.33 

1907  

63,341,055 

4,471,137 

7. 

18.103 

11.103 

Five  years  

294,595,687 

22,868,778 

7.76 

15.7 

8 

194  THE  COST  OF  MINING 

The  amount  invested  in  plant  is  given  at  $4,974,866.  Since 
it  is  stated  above  with  reference  to  the  Bisbee  district,  by  Dr. 
Douglas  that  the  ores  of  the  Copper  Queen  average  about  140  Ib. 
copper  per  ton,  an  approximation  that  is  borne  out  by  the  record 
of  the  neighboring  Calumet  &  Arizona  mine,  it  does  not  seem 
rash  to  say  that  the  mining  plant  is  equal  to  a  capacity  of  600,000 
tons  a  year,  and  the  smelting  plant  to  900,000  tons  a  year.  Aver- 
aging the  two  we  might  say  the  plant  is  such  that  an  output  of 
at  least  750,000  tons  a  year  can  be  taken  care  of.  The  cost  of 
mining  and  smelting  plants  may,  therefore,  be  approximated  at 
$7  per  ton  of  annual  capacity.  Taking  into  consideration  the 
character  of  the  orebodies  exhibited  by  the  remarks  in  the  pro- 
spectus, it  seems  fair  to  calculate  the  amortization  of  plant  in  a 
period  not  exceeding  fifteen  years  from  the  beginning  of  the 
term  in  question.  This  requires  an  annual  instalment  of  10  per 
cent.  To  this  should  be  added  depreciation  at  6  per  cent,  to 
cover  the  current  construction.  Applying  these  figures,  not  the 
whole  period,  but  to  the  maximum  capacity  reached  at  the  end, 
we  get 

For  amortization $0.70  per  ton 

For  depreciation 42  per  ton 

Total    $1.12  per  ton 

Dividing  this  by  140  Ib.,  the  average  amount  of  copper 
realized  per  ton,  we  get  0.8  cents  per  pound  as  the  amount  that 
should  be  added  to  operating  charges  for  plant  account.  I  am 
disposed  to  regard  this  as  a  minimum  figure  and  prefer  to  believe 
that  at  least  1  cent  per  pound  should  be  added  for  these  charges. 
This  would  mean  only  $2,940,000  in  five  years  for  the  use  of  cap- 
ital already  invested  and  for  current  construction.  It  is  to  be 
presumed  that  the  company  made  some  profit  on  treating  cus- 
tom ores,  but  as  these  ores  must  have  come  largely  from  other 
mines  owned  by  the  same  group,  it  is  not  likely  that  such  profits 
would  be  sufficient  to  alter  the  calculation  materially.  My 
estimate  of  costs,  then,  for  the  Copper  Queen  is  as  follows: 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND   MEXICO        195 


Operating  Costs 
Cents 

Capital  Costs 
Cents 

Total 
Cents 

1903  
1904 

6.7 
6.96 

1 

1 

7.7 
796 

1905 

6.22 

1 

722 

1906  

8.33 

1 

9.33 

1907  
Average 

11.1 

8 

1 
1 

12.1 
9 

It  will  be  noted  that  the  average  is  exceedingly  close  to  that 
figured  for  Calumet  &  Arizona;  and,  further,  that  a  consider- 
able rise  was  incident  to  the  boom  period  of  1906-07. 

MOCTEZUMA  COPPER  COMPANY 

The  figures  on  this  property  are  very  interesting  in  view  of 
the  light  they  throw  on  the  probable  results  to  be  obtained  from 
the  Miami,  Ray,  and  other  new  properties  of  approximately  the 
same  grade  and  type. 


Year 

Output 
Pounds 

Operating 
Profits 

Profits  per 
Pound 

Average 
Price 

Operating 
Cost 

1903  

10,281,970 

456,524 

4.44 

12  6 

8  16 

1904  

11,061,641 

598,992 

5.44 

12  562 

7  178 

1905 

10,160,016 

533  117 

5  25 

14  923 

9  773 

1906  

12,714,726 

1,195,424 

9.4 

1796 

8  56 

1907  

9,640,390 

833,236 

9.64 

18.1 

9.46 

Five  years  

53,858,751 

3,617,295 

6.7 

15  3 

8  6 

In  this  case  the  plant  investment  is  $3,046,384,  and  the  pro- 
ducing capacity  is  now  easily  24,000,000  Ib.  a  year.  Calcula- 
ting depreciation  at  6  per  cent,  we  get  an  annual  charge  of 
$182,800  a  year,  equal  to  0.76  cents  per  pound.  Add  this  to  8.6 
and  we  have  9.36  cents  as  the  dividend  cost.  It  is  very  prob- 
able that  with  the  increased  tonnage  now  possible,  the  cost  will 
average  not  over  9  cents. 

On  a  life  of  twenty  years,  the  plant  may  be  amortized  at  8 
per  cent.,  equal  to  about  1  cent  per  pound.  The  selling  cost  may 
then  be  put  at  between  10  and  10J  cents,  a  figure  that  fully  bears 
out  the  conclusions  arrived  at  from  other  sources.1 

1  See  Chapter  XIII.  for  discussion  of  the  cost  of  producing  copper  from 
ores  of  approximately  this  grade  and  type. 


196 


THE  COST  OF  MINING 


DETROIT  COPPER  COMPANY 

Neglecting  the  explanation  of  details,  it  appears  that  this 
company  earned  $3,467,810  from  86,247,889  Ib.  copper,  equal 
to  4  cents  a  pound.  The  cost  must  have  been  about  11.3  cents. 
The  capital  invested  is  only  $2,158,106,  on  which  depreciation 
at  6  per  cent,  gives  an  additional  cost  of  0.7  cents  per  pound. 
The  dividend  cost  may  be  calculated  at  12  cents. 

In  all  of  the  above  calculations  I  have  failed  to  exhibit  the 
copper  equivalent  for  gold  and  silver  contained,  because  the 
amounts  are  not  given.  In  most  of  these  mines,  however, 
the  value  of  precious  metals  is  only  2  to  3  per  cent,  of  the  total, 
so  that  the  figures  given  cannot  be  far  astray  from  this  cause. 

GREENE  CONSOLIDATED,  CANANEA,  MEXICO 

This  company  has  a  very  large  property  near  the  Arizona 
border  in  the  state  of  Sonora,  Mexico.  In  1906  the  Greene 
Cananea  Company  was  formed  to  consolidate  the  old  Greene 
Consolidated  Copper  Company,  and  the  Cananea  Central  Copper 
Company.  The  management  has  been  completely  reorganized. 

The  record  of  the  old  Greene  Consolidated  Company  was  as 
follows : 


Output  and  Dividends 

GREENE  C( 

)NSOLIDATED 

Lb.    Copper 

Dividends 

1901 

28  826  854 

$400  000 

1902  

38,268,407 

1903 

42,310,544 

600000 

1904 

55  014  339 

1  200  000 

1905  

63,005,848 

2  800  000 

1906 

55  943  739 

1  200  000 

283,369,731 

$6,200,000 

The  dividends  are  up  till  March,  1907. 

It  appears  that  up  to  that  date  the  dividends,  which  must 
represent  approximately  the  earnings,  were  equal  to  2.19  cents 
per  pound  copper  produced.  If  we  count  as  copper  the  value 
of  silver  and  gold  produced,  the  earnings  per  pound  would  be 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO       197 

about  2  cents.  Since  in  those  particular  years  the  average  price 
of  copper  was  about  14.9  cents,  we  may  conclude  the  average 
cost  to  have  been  about  12.7  cents;  and  since  at  the  end  of  the 
period  it  was  found  necessary  to  undertake  large  improvements, 
it  is  altogether  probable  that  something  should  be  added  for 
depreciation. 

No  estimate  of  the  amount  of  ore  in  sight  is  given  in  the 
report  for  1908. 

The  report  goes  into  the  question  of  mining  costs  so  thor- 
oughly and  with  so  much  good  sense  and  poise  that  I  quote  largely 
from  the  statements  of  the  general  manager,  Mr.  L.  D.  Ricketts. 
It  will  be  seen  that  the  reduction  of  costs  in  all  departments  has 
been  enormous.  But  it  occurs  to  me  to  point  out  one  or  two 
reasons  for  accepting  with  a  little  caution  the  conclusion  that 
the  process  of  reduction  is  so  firmly  intrenched  that  further 
reductions  are  inevitable. 

First  let  me  note  that  during  1908  the  monthly  tonnage 
treated  was  about  60,000  against  nearly  100,000  in  former  periods. 
It  is  just  possible  that  the  reduced  tonnage  may  have  great 
advantages  over  the  full  tonnage  in  that  it  is  secured  with 
selected  labor  and  from  selected  places. 

Either  of  these  advantages  may  be  of  great  consequence  in 
the  matter  of  costs,  as  has  been  pointed  out  in  the  chapter  on 
the  Value  of  Mining  Property.  It  comes  as  an  example  of  how 
costs  go  down  in  periods  of  depression. 

Second,  it  is  worth  considering  whether  the  period  under 
review  does  not  get  great  advantages  from  the  reconstruction 
that  preceded  it.  All  plants  were  overhauled  and  renovated. 
It  is  natural  to  suppose  that  in  consequence  everything  was  in 
excellent  repair  —  better  than  average.  As  to  charging  up  cur- 
rent construction  to  operating,  that  is  something  that  always 
must  be  done  sometime  —  whether  the  cost  sheets  show  it  or 
not.  There  is  no  great  virtue  in  doing  it  in  this  particular  case 
because  in  this  very  year,  outside  of  what  was  charged  to  opera- 
ting, there  was  spent  on  plant  no  less  than  $820,000  or  5^ 
cents  per  pound  of  copper  produced  from  the  company's  own 
mines. 

Furthermore,  let  us  consider  the  following:  At  average  prices 
for  the  last  ten  years  (15.4  cents  copper,  57  cents  silver,  and  $20 
gold)  the  ore  for  1908  shows  the  following  values: 


198  THE  COST   OF   MINING 

Copper 53.4          Ibs.  =  $8.22 

Silver 0.923      oz.    =      .54 

Gold  .  0.00575  oz.    =    0.115 


Total    8.87    =  57.6  Ib.  copper. 

The  costs  for  1908,  the  lowest  on  record,  are  $5.976  per  ton. 
This  gives  10.37  cents  per  pound  for  the  copper,  or  its  equivalent, 
extracted.  With  these  costs,  the  profit  per  pound  is  5  cents  and 
we  might  expect  a  profit,  under  average  conditions,  of  some 
$2.80  per  ton  mined  and  treated.  With  these  comments  the 
following  is  quoted  directly  from  the  report. 

"  THE  CANANEA  CONSOLIDATED  COPPER  COMPANY,  S.A. 
AUDITOR'S   REPORT 

December  31,  1908 

Earnings 
Total  earnings  on  copper,  gold  and  silver,  and  net  earnings 

from  miscellaneous  revenues   $2,427,335.79 

Expenditures 
Total  expenditures  account  copper,  gold,  and  silver 1,821,029.85 

Net  profit  for  year $606,305.94 

Sundry  expenditures,  including  shut-down  costs,  etc 820,446.56 

Deficit  for  the  year  1908 $214,140.62 

REPORT  OF  GENERAL  MANAGER 

The  figures  of  production  are  for  the  period  beginning  July 
11,  1908,  when  operations  were  resumed,  to  the  close  of  the 
calendar  year.  In  reading  this  report  I  would  respectfully  refer 
you  to  my  report  of  February  15,  1908. 

Tonnages 

Wet  tons  domestic  ore  treated 295,554 

Wet  tons  custom  ore  treated 72,088 


Total 367,642 

Ratio  of  concentration,  domestic  ore  milled   3.12  tons  into  1 

Ratio  of  concentration,  custom  ore  milled 4.02  tons  into  1 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO       199 


Production 

Returnable  fine  copper  in  domestic  bullion 15,679,685  Ib. 

Returnable  fine  copper  in  bullion  from  custom  ore 2,939,924  Ib. 

Total 18,619,609  Ib. 

Silver  in  domestic  bullion 272,651.24  oz. 

Silver  in  bullion  from  custom  ore  175,011.99  oz. 


Total  silver 447,663.23  oz. 

Gold  in  domestic  bullion 1,700.683  oz. 

Gold  in  bullion  from  custom  ore 1,178.150  oz. 


Total  gold  2,878.833  oz. 

RECOVERY  FROM  ORES 

Recovery  from  domestic  ore  and  other  material  treated  was 
as  follows : 

Copper  2.652  per  cent.          Silver  0.923  oz.  Gold  0.00575  oz. 

The  value  of  the  precious  metals  per  ton  of  domestic  copper 
produced  amounted  to  $21.09. 

Development  during  period:  January  1  to  December  31-,  1908: 

Shafts 412.5  ft. 

Winzes  and  raises    3,550.5  ft. 

Tunnels,  drifts,  and  crosscuts 9,388.0  ft. 


Total    13,351.0  ft. 

THE  MINES 

The  following  statement  covers  the  tonnages  and  costs  of 
mining  at  the  various  mines: 


* 

Wet  Tons 

Total  Cost 

Cost  per  Wet 
Ton 

Puertocitos                                        .  . 

18,465.4 

$41  549  68 

$2  250 

Elisa 

40  481  4 

71  580  00 

1  764 

Capote  
Oversight                                    .      .  . 

15,923.1 

142,824.8 

82,088.64 
272  766  63 

5.155 
1  910 

Veta  Grande 

91,901  3 

191  992  54 

2  089 

Total 

309  696  0 

659  997  49 

2  131 

THE  COST  OF  MINING 

"  The  cost  of  mining  for  the  total  tonnage  mined  was  $2.13  per 
wet  ton.     For  the  fifteen  months  ending  October  31,   1907,  it 


200  THE  COST  OF  MINING 

was  $3.28,  and  for  the  year  1905-1906  it  was  $3.85.  Great  credit 
belongs  to  the  Mining  Department  for  this  showing  under  most 
difficult  conditions.  The  reasons  for  the  decreased  costs  are 
twofold.  First,  the  slicing  and  caving  system  has  been  thor- 
oughly learned  and  applied  to  the  various  mines  in  the  modified 
forms  which  the  conditions  demand.  This  has  resulted  in  a 
decreased  amount  of  timber  and  supplies  and  an  increased  effi- 
ciency of  the  men.  The  second  reason  is  that  the  Mining  Depart- 
ment has  been  entirely  reorganized  and  the  average  pay  per 
employee  has  been  decreased  by  this  readjustment  very  nearly 
20  per  cent.  We  have,  therefore,  a  decreased  cost  per  man  and 
an  increased  output  per  man.  For  the  period  in  question  the 
output  per  man  has  been  increased  from  1.2  to  1.6  tons,  and 
this  covers  not  only  the  miners  but  the  muckers,  trammers, 
blacksmiths,  and  in  fact  every  employee  of  the  mines  up  to  and 
including  the  foremen.  It  is  hard  to  realize  the  difficulties  that 
have  been  encountered  in  accomplishing  this,  but  it  had  to  be 
done  and  was  done. 

"  Departing  from  facts  and  predicting  for  the  future,  I  have 
little  doubt  that  we  will  be  able  to  maintain  and  improve  upon 
these  costs  in  spite  of  the  tremendously  increased  amount  of 
development  work  we  propose  to  do,  and  we  can  look  to  continued 
decreases  in  mining  costs  rather  than  increases  for  some  time 
to  come;  but  in  saying  this  I  am  keeping  in  mind  certain  capital 
expenditures  which  are  exceedingly  urgent.  This  construction 
provides  cheaper  compressed  air  and  more  electrical  power  at 
the  mines.  You  have  authorized  and  we  are  now  installing  an 
air  compressor  of  6000  cu.  ft.  of  free  air  per  minute  capacity  at 
the  power  house  and  will  lay  a  pipe  line  to  four  of  the  mines  and 
replace  with  this  one  machine  eight  uneconomical  small  machines. 
Since  the  reverberatory  furnace  is  generating  an  average  of  over 
600  boiler  horse-power  we  have  a  surplus  of  boilers  at  the  power 
house  and  no  new  boilers  are  needed,  and  our  power  house  con- 
denser is  abundantly  large  to  take  care  of  this  compressor.  In 
addition  to  this  we  are  now  up  to  the  limit  of  our  electrical  gen- 
erating capacity  and  it  is  essential  that  we  should  put  in  more 
power  for  the  use  of  the  mines.  Mr.  John  Langton,  consulting 
engineer,  is  now  making  a  study  and  report  on  our  power  equip- 
ment, and  is  preparing  specifications  to  be  submitted  to  you. 
It  would  appear  that  with  an  expenditure  of  $57,000  we  can 


VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO        201 

increase  our  capacity  1000  kilowatts  and  reduce  the  cost  of 
generating  power  per  kilowatt  year  about  15  per  cent.  If  this 
unit  is  put  in  there  is  no  question  but  that  other  capital  expen- 
ditures will  be  required,  because  if  we  can  change  over  our  steam 
hoists  of  four  of  our  shafts  to  electrically  driven  hoists  by  the 
addition  of  the  proper  motors  we  can  abandon  entirely  four  very 
expensive  steam  plants.  If  the  program  is  approved  and  car- 
ried out  it  will  require  a  total  expenditure  of  about  $120,000. 
In  making  this  recommendation  I  have  carefully  considered  the 
tremendous  expenditures  that  we  have  had  to  make  and  am 
still  keeping  in  mind  the  rule  of  recommending  only  expenditures 
that  will  pay  for  themselves  in  one  year's  operations." 

THE  CONCENTRATORS 

"  The  Cananea  ore  is  probably  the  most  difficult  to  concen- 
trate of  any  copper  ore  in  the  country  on  account  of  the  tre- 
mendous amount  of  clay,  which  is  not  only  not  susceptible  to 
dressing,  but  which  prevents  proper  settling  of  the  fine  sands. 
Our  losses  on  this  account  are  high  and  there  are  certain  losses 
that  we  have  proved  by  experiment  we  can  recover  by  collect- 
ing the  fine  sands  from  the  large  settling  tanks  below  the  mill 
and  reconcentrating  them.  We  are  now  installing  a  vanner 
house  about  300  ft.  in  length  on  the  opposite  side  of  the  canyon, 
and  will  rehandle  the  fine  sands  from  the  tailings  over  the  40 
vanners  and  10  card  tables  that  are  being  installed  therein.  In 
conjunction  with  this  vanner  house  Mr.  Cole  has  installed  settling 
tanks  of  approved  plan,  and  it  includes,  of  course,  appliances 
for  conveying  the  concentrates  to  the  railroad  storage  bins. 
Later  on  we  propose  to  double  the  capacity  of  this  plant.  The 
preliminary  installation  will  cost  $50,000  and  the  additional 
50  vanners  will  cost  about  $30,000  more. 

"  In  all  of  these  improvements  we  have  followed  the  plan  of 
undertaking  no  construction  that  will  not  pay  for  itself  within 
a  year. 

"  The  cost  of  concentration  of  the  domestic  ores  was  $0.94  per 
ton  on  account  of  the  immense  amount  of  construction  charged 
to  operations,  but  the  result  will  be  not  only  an  increased  saving, 
which  is  badly  needed,  our  present  saving  being  only  about 
70  per  cent.,  but  we  can  safely  see  a  reduction  in  cost  to  75  cents 
per  ton  or  under.  The  same  care  was  taken  in  reorganization  in 


202 


THE  COST  OF  MINING 


starting  up   the   concentrator  with  what  undoubtedly  is  very 
beneficial  results. 

THE  REDUCTION  DIVISION 

11  The  average  daily  pay-roll  at  the  smelter,  including  the 
power  house,  was  formerly  $1,823.57,  and  during  the  past  six 
months  it  has  been  $763.57.  The  efficiency  of  blast  in  convert- 
ing has  been  raised  from  43  per  cent,  to  61  per  cent.,  and  the 
efficiency  of  blast  on  the  furnaces  has  been  raised  a  corresponding 
amount. 

"  The  reverberatory  ran  150  furnace  days.  It  treated  30,275 
tons  of  net  dry  charge  at  a  cost  of  $1.83  per  ton,  allowing  a  credit 
of  60  cents  per  ton  for  steam  generated  in  the  reverberatory 
boilers.  This  average  is  high  because  the  first  few  months'  run 
was  very  much  more  costly  than  later  on,  and  we  have  recently 
been  smelting  for  about  $1.37  per  ton,  allowing  credit  for  steam 
generated.  The  cost  of  power  has  been  reduced  about  40  per 
cent. 

"  I  give  below  a  table  compiled  from  Mr.  Shelby's  report,  show-, 
ing  comparative  results  for  the  six  months  prior  to  and  the  six 
months  subsequent  to  the  shut-down,  covering  the  total  Reduc- 
tion Division  costs  per  ton  of  ore  and  old  secondaries  treated, 
per  ton  of  new  material  treated,  and  per  ton  of  fine  copper  pro- 
duced. 

"  REDUCTION  DIVISION  COST  COMPARISONS 
Last  six  months'  operations  for  1907  and  1908: 

BASIS  PER  DRY  TON 
TONS  TREATED  OR  PRODUCED 


Ores  and  Concentrates 

New  Material 

Fine  Copper 

1907 

1908 

1907 

1908 

1907 

1908 

Total  costs  .  .  . 

220,446 

$6.82 

164,361 

$3.86 

299,620 
$5.02 

217,177 

$2.93 

11,103.288 
$135.47 

9,295.769 

$68.47 

VARIOUS  COPPER  MINES   OF  ARIZONA  AND  MEXICO        203 


MINING  AND  BENEFICIATING 
"  Copper  costs  for  six  months  of  operation  were 

Gross  costs,  F.  O.  B.  Cananea    

Freight  to  New  York,  export  tax,  refining,  market- 
ing, interest,  etc • 

Total  cost 

Credit  for  value  of  precious  metals $0.0105446 

Miscellaneous  revenues  at  Cananea 0.0075206 


Total  cost  of  fine  copper  sold 

Construction  not  charged  to  operation 
Cost  including  every  expenditure 


as  follows: 
$0.0992751 

0.0168642 
$0.1161393 

0.0180652 

$0.0980741 
$0.0070583 
$0.1051324 


"  The  yield  of  copper  per  ton  of  ore  beneficiated  given  at  the 
beginning  of  this  report  is  misleading  in  that  during  July  we 
smelted  a  considerable  tonnage  of  cleanings  found  in  tearing  out 
old  ore  bins  and  other  structures.  The  actual  net  yield  of  the 
ore  beneficiated  was  51.25  Ib.  per  ton  as  against  46.58  Ib.  for 
the  fifteen  months  ending  October  31,  1907.  Owing  to  the  de- 
creased cost  of  smelting  we  have  been  able  to  send  leaner  ores 
of  the  Puertocitos  and  Elisa  class  to  the  smelter  with  a  handsome 
margin  of  profit,  and  we  have  been  able  to  smelt  leaner  ores 
that  formerly  went  to  the  concentrator.  This  has  resulted  in 
increasing  by  nearly  50  per  cent,  the  percentage  of  direct  smelting 
ore  to  the  total  ore  mined  and  has  caused  an  increased  yield  per 
ton.  As  a  matter  of  fact,  therefore,  the  average  gross  copper 
contents  of  the  ore  have  not  increased  even  as  much  as  the  figures 
above  would  indicate.  On  the  other  hand,  the  greater  percent- 
age of  ore  smelted  direct  has  tended  to  increase  the  total  cost 
of  mining  and  beneficiating  a  ton  of  ore,  but  with  this  increase 
the  cost  is  more  than  paid  for  by  the  increased  saving  of  values. 

"  The  following  is  the  total  cost  of  mining  and  beneficiating  a 
ton  of  ore,  including  every  cost  until  the  refined  products  are  sold : 


Period 

Cost  per  Ton 

Tons  Beneficiated 

Fiscal  Year  1905-1906          

$10.21 

947  977 

August  1    1906   to  October  31    1907  

7  625 

1  305  291 

July  11  to  December  31    1908 

5976 

295  554 

204  THE  COST  OF   MINING 

"  The  results  show  a  decreased  cost  during  the  six  months  of 
1908  of  $1.649  per  ton  over  the  previous  period,  and  a  decrease 
of  $4.234  over  the  fiscal  year  1905-06.  In  other  words,  had  we 
been  able  to  mine  and  beneficiate  the  ore  for  the  fifteen  months 
ending  October  31,  1907,  under  present  conditions  the  cost  would 
have  been  decreased  by  about  $2,150,000  plus  the  value  of  the 
increased  saving. 

"  In  making  a  careful  and  balanced  study  of  the  cost  of  mining 
and  beneficiating  ore  two  years  ago  the  vital  features  were  ob- 
vious. It  was  necessary  to  get  cheaper  mining  costs,  cheaper 
smelting  costs,  cheaper  fuel,  cheaper  power  and  cheaper  trans- 
portation. While  we  have  made  notable  advance  on  the  first 
four  items  we  have  been  unable  to  obtain  any  adequate  conces- 
sions in  the  matter  of  the  heavy  freight  rates  on  fuel  and  sup- 
plies. We  are  virtually  in  the  same  location  as  our  neighbors 
across  the  line  when  the  great  distance  from  the  source  of  fuel, 
coke,  and  supplies  is  considered,  yet  we  are  charged  rates  that 
in  the  aggregate  amount  to  one  cent  per  pound  of  copper  in 
excess  of  the  rates  paid  by  our  neighbors,  and  the  burden  is  hard 
to  carry.  The  question  is  serious,  yet  we  think  fair  freight  rates 
would  mean  increased  tonnages  that  give  the  highest  profit  to 
all  concerned. 

"  While  predictions  are  dangerous,  and  I  have  in  this  report 
only  given  figures  from  results  actually  accomplished,  I  have  no 
hesitation  in  saying  that  we  shall  be  able  to  continue  decreasing 
the  cost  of  mining  and  beneficiation  and  increasing  the  per- 
centage of  saving  to  a  notable  degree,  although  we  cannot  expect 
to  make  reductions  corresponding  to  those  made  during  the  past 
year/' 


CHAPTER  XII 
COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS 

Tennessee  Copper  Company  —  Utah  Consolidated  —  Mount  Lyell  in  Tas- 
mania —  Granby  Consolidated  in  British  Columbia  —  Utah  Copper 
Company  —  Northern  California  —  First  National  Copper  Company. 

TENNESSEE  COPPER  COMPANY 

ONLY  one  mine  of  importance  is  found  in  the  United  States 
east  of  Lake  Superior.  It  is  owned  by  the  Tennessee  Copper 
Company,  which  works  several  large  lenses  of  cupriferous  pyrite. 
All  the  ore  must  be  smelted  in  the  blast  furnace.  For  ores  of 
this  character  I  believe  this  company  does  the  cheapest  work  in 
the  world.  Its  reports  are  excellent  and  reveal  not  only  the 
operating  costs  in  detail,  but  also  the  plant  expenditure  and  the 
ore  in  sight. 

The  external  factors  are  favorable.  Fuel  is  cheap  and  trans- 
portation to  markets  much  less  than  for  western  mines.  Wages 
are  about  20  cents  an  hour,  but  I  do  not  believe  this  means  cheap 
labor. 

The  internal  factors  are  favorable,  with  the  exception  of  the 
necessity  of  smelting  all  the  ore.  This  is  a  most  powerful  ele- 
ment of  high  cost.  The  ore  yields  only  32J  Ib.  copper  to  the 
ton. 

The  current  operating  costs  for  1907  were  as  follows: 

Mining    ...........................................   $1.22 

Smelting     .........................................     2.14 

Administration  etc  ..................................     0.49 


Total 


To  this  I  think  should  be  added  21  cents  a  ton  for  the  use  of 
the  mining  plant  and  47  cents  a  ton  for  the  use  of  the  railroad 
and  the  smelting  plant,  making  a  total  of  $4.53. 

In  detail  these  costs  are  as  follows: 

205 


206 


THE  COST  OF  MINING 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         207 

Development    $0.1318 

Mining,  hoisting,  etc 0.9389 

Crushing  and  sorting 0.0804 

General..  0.0851 


Total  current  cost    $1.2162 

Add  cost  of  preliminary  development  amortized  in  15 
years  at  5  per  cent,  interest  and  5  per  cent,  annual  amor- 
tization    0.06 

Mining  plant  similarly  amortized    0.15 

Transportation  to  smelter    $0.1329 

Blast  furnace    1.6279 

Engineering  and  laboratory 0.0628 

General 0.0852 

Converting    0.2402 

Total  current  smelting  cost    $2.1430 

Add  amortization  of  smelting  plant  and  railway  as  above  0.47 

Add  administration,  shipping,  refining  and  selling  expenses  0.49 

Grand  total $4.5292 

On  the  basis  thus  figured,  anything  received  above  12  cents  a 
pound  for  copper  in  New  York  is  applicable  to  dividends,  and 
anything  above  14  cents  is  net  profit  after  allowing  for  the  return 
with  interest  of  money  invested  in  the  plant.  These  costs  are 
higher  than  the  average  by  from  5  to  10  per  cent.  The  costs 
for  1907  were  high  on  account  of  unfavorable  economic  condi- 
tions throughout  the  country.  It  should  be  explained  further 
that  in  addition  to  the  copper  the  sulphur  is  being  utilized  so 
that  in  future  the  property  will  not  be  wholly  a  copper  mine. 
Its  operations  will  be  nearly  equivalent  to  those  of  the  Rio  Tinto 
Company  in  Spain. 

UTAH  CONSOLIDATED 

This  company  has  mined  since  1899  large  deposits  of  cu- 
priferous pyrite  at  Bingham,  Utah,  averaging  by  actual  recovery 
for  five  years  60  Ib.  copper,  1.33  oz.  silver,  and  0.104  oz.  gold 
per  ton.  The  silver  and  gold  are  worth  about  $2.88  per  ton,  so 
that  with  copper  at  14  cents  per  pound  there  is  a  total  metallic 
extraction  equivalent  to  80  Ib.  copper.  The  ore  occurs  in  large 
lenses  or  shoots  in  limestone.  It  is  approximately  self-fluxing, 
there  being  a  moderate  excess  of  iron  over  silica.  Most  of  the 
mining  has  been  done  through  adit  levels.  The  mining  plant  is 
not  extensive.  The  ore  is  delivered  to  the  railroad  over  an  aerial 


208  THE  COST   OF   MINING 

tramway  about  12,000  ft.  long.  It  is  transported  by  rail  about 
25  miles  to  the  smelter. 

The  external  conditions  are,  for  the  Rocky  Mountain  region, 
good,  and  the  internal  factors,  with  the  single  exception  of  the 
requirement  of  smelting  all  the  ore,  very  favorable  for  cheap 
work.  The  ore  is  soft,  uniform,  and  occurs  in  good-sized  bodies. 
The  stoping  is  done  in  square-set  rooms.  The  item  of  timber- 
ing must  be  one  of  the  chief  mining  expenses. 

There  is  nothing  in  the  reports  to  show  the  mining  or  smelting 
losses;  but  with  this  exception  the  reports  are  excellent.  They 
give  the  stockholders  in  brief  but  sufficient  outline  the  costs 
and  financial  results  of  the  business. 

In  the  five  years  ending  December  31,  1907,  the  costs  were 
as  follows : 

COSTS  PER  TON  FOR  F[VE  YEARS,  UTAH  CONSOLIDATED 

Per  Ton 

Mining,  1,260,453  tons     $1.73 

Development,  1.400,000  tons      0.30 

Transportation,  smelting,  and  refining,  1,276,393  tons    2.80 

General  expense,  1,276,393  tons    0.23 

Current  construction,  1,276,393  tons    0.34 

Amortization  at  5  per  cent,  interest  and  5  per  cent,  annual  amorti- 
zation of  $1,232,274  invested  in  plant  at  beginning  of  period ;  this 
being  sufficient  to  retire  the  investment  in  15  years  •--  proportion 

for  five  years 0.4S 

Total  cost $5.88 

Recollecting  that  the  ore  contains  in  copper,  gold,  and  sil- 
ver the  equivalent  of  80  Ib.  copper  to  the  ton,  we  get  an  average 
complete  cost  of  producing  copper  of  7.35  cents  per  pound.  This 
may  be  divided  as  follows:  actual  operating  cost,  6.75  cents; 
allowance  for  return  of  working  plant,  0.60  cents.  Of  course, 
everything  received  above  6.75  cents  for  copper  or  its  equivalent 
in  New  York  goes  to  the  stockholders  as  dividends. 

The  report  of  the  Utah  Consoldiated  for  the  year  1908  exhibits 
conditions  that  are  not  comparable  with  certainty  to  those  of 
former  years.  The  smelter,  which  was  the  principal  plant  asset 
of  the  company,  had  to  be  permanently  shut  down  on  account 
of  a  decision  of  the  court  to  the  effect  that  its  operation  was  in- 
imical to  the  agricultural  interests  of  the  Salt  Lake  valley.  In 
1908  the  ore  was  treated  at  the  Garfield  smelter  of  the  American 
Smelters  Securities  Company,  under  terms  that  the  Utah  Con- 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         209 

solidated  believes  to  be  unfavorable.  Certain  deductions  were 
made  from  the  metal  contents  of  the  ores  under  this  contract. 
The  exact  amounts  deducted  are  not  stated. 

On  the  face  of  the  returns  the  record  for  the  year  were  dis- 
appointing. The  costs  were  as  follows: 

Per  Ton 

Mining  248,215  tons    $    461,711  $1.86 

Ex.  and  development    73,441  .30 

Mine  plant 3,869  .01 

Smelting  and  transportation    921,239  3.71 

Depreciation  and  general 127,569  .52 

Current  construction 129,621  .52 

Add  refining  and  marketing,  bullion  actually  produced.  120,400  .48 

Total  operating    $1,837,850         $7.40 

Copper  metal,  Ib 10,648,243 

Silver,  oz 265,284 

Gold,  oz 23,441 

At  the  prices  current  during  the  year  this  equals  15,225,000 
Ib.  refined  copper.  This  is  61.4  Ib.  per  ton.  Dividing  the 
operating  cost  of  $7.40  per  ton  by  this  amount  we  get  12  cents 
as  the  cost  of  copper  per  pound. 

The  ore  reserves  have  been  increased  so  that  there  is  no  rea- 
son to  change  the  amortization  charge  of  48  cents  a  ton  given 
above.  This,  on  account  of  the  diminished  yield  of  the  ore  is 
now  equal  to  about  0.8  cents  per  pound.  Adding  this  we  get 
12.8  cents  as  the  selling  cost  of  copper  for  the  year. 

Needless  to  remark  that  this  showing  is  disastrous  and  un- 
doubtedly the  stockholders  will  await  with  impatience  the  inau- 
guration of  new  smelter  arrangements,  which,  it  is  announced, 
will  be  provided  by  the  new  International  Smelting  Company. 

MOUNT  LYELL 

The  Mount  Lyell  Company  operates  a  cupriferous  pyrite 
mine  and  a  smelter  in  western  Tasmania.  The  original  Mount 
Lyell  deposit  was  a  great  mass  of  nearly  pure  iron  pyrite  con- 
taining only  0.6  per  cent,  copper,  but  a  portion  of  it  had  been 
enriched  near  the  surface.  This  deposit  has  been  mined  almost 
wholly  from  an  open  pit.  Another  mine,  however,  called  the 
North  Mount  Lyell,  produces  a  much  more  siliceous  ore  averaging 


210  THE  COST  OF  MINING 

6  per  cent,  copper.  This  ore  has  to  be  mined  underground.  Dur- 
ing the  last  four  years,  which  will  presently  be  reviewed,  about 
60  per  cent,  of  the  ore  has  come  from  the  Mount  Lyell  proper 
and  40  per.  cent,  from  the  North  Mount  Lyell. 

The  external  factors  are  probably  nearly  average  for  English- 
speaking  countries.  The  climate  is  rainy,  but  not  more  so  than 
Cornwall  or  Scotland.  The  mine  is  situated  near  the  coast,  so 
that  supplies  must  be  reasonable  in  cost,  and  transportation  of 
copper,  even  to  England,  must  cost  less  than  transportation  of 
western  American  copper  to  New  York. 

The  internal  factors  are,  for  a  smelting  enterprise,  very  favor- 
able. The  ores  are  mined,  thanks  to  the  large  proportion  ob- 
tained from  the  open  pit,  for  less  than  $2  a  ton.  The  smelting 
is  largely  pyritic  and  the  proportion  of  coke  used  in  the  charge 
is  said  to  be  only  one  per  cent. 

In  four  years  1,690,531  tons  were  mined.  In  the  same  period 
the  ore  reserves  diminished  from  4,666,000  to  4,107,000  tons, 
a  loss  of  559,000  tons.  At  this  rate  of  loss  the  property  would 
last  thirty  years,  but  since  (1)  a  large  part  of  the  low-grade 
pyrite  which  hitherto  has  been  mined  from  open  pits  must  be 
taken  at  greater  cost  from  underground  and,  (2)  there  does  not 
seem  to  be  a  first-class  reason  to  believe  that  the  rich  ores  of 
North  Mount  Lyell  can  be  found  in  the  same  abundance  for  a 
long  period,  it  seems  safer  to  estimate  a  life  of  twenty  years  as 
the  amortizing  period  of  the  investment.  On  this  basis  we  may 
compute  the  costs  as  follows  : 

COSTS  PER  TON  AT  MOUNT  LYELL 

Mining  1,690,531  tons $1.05 

Stripping  1,690,531  tons 0.26 

Developing  1,131,258  tons 0.50 

Total  mining , $1.81 

Smelting  1,698,793  tons   $1  78 

Converting  1,698,793  tons    0.34 

Railway  expenses 0.27 

Freight  and  marketing 0.72 

Total  for  smelting,  refining,  and  marketing  ^ $3.11 

General  expense  1,698,795  tons $0.25 

Use  of  plant;  being  5  per  cent,  interest  and  3  per  cent,  amorti- 
zation for  four  years  on  average  amount  invested  (£376,000)     0.35         0.60 

Total  cost   .  $5.52 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         211 

The  actual  returns  of  metal  from  the  Mount  Lyell  ores  have 
been  34,210  long  tons  copper,  3,056,231  oz.  silver,  and  91,815  oz. 
gold.  The  extraction  has  been  86  per  cent,  copper,  99  per  cent, 
silver,  and  105  per  cent,  of  the  gold  estimated  by  assay  to  be 
contained  in  the  ore.  There  is  no  statement  as  to  whether  the 
ore  treated  is  given  in  long  tons  or  short  tons,  but  it  is  probably 
safe  to  assume  that  the  copper  output  is  given  in  long  tons.  We 
have  on  this  basis  a  recovery  of  45.5  Ib.  copper,  1.8  oz.  silver, 
and  0.054  oz.  gold  per  ton  of  ore  treated.  The  gold  and  silver 
are  worth  $2.18  per  ton,  at  average  prices.  This  is  the  equiva- 
lent of  15J  Ib.  copper,  and  we  may  figure  the  metallic  contents 
altogether  as  equal  to  61  Ib.  copper.  On  this  basis  the  cost  per 
pound  of  copper  is  9  cents. 

GRANBY  CONSOLIDATED 

The  Granby  Consolidated  Mining,  Smelting  and  Power  Com- 
pany, Limited,  British  Columbia,  has  mined  in  three  years 
1,995,948  tons  and  treated  2,088,381  tons.  The  ore  yielded  by 
actual  extraction  24.2  Ib.  copper,  0.38  oz.  silver,  and  0.06  oz. 
gold  per  ton.  The  silver  and  gold  are  worth  $1.42  per  ton,  equal 
to  about  10  Ib.  copper.  The  total  value,  therefore,  is  equiva- 
lent to  a  little  more  than  34  Ib.  copper,  and  this  may  be  taken 
as  a  safe  basis  for  figuring  the  economic  performance  of  the  mine. 
The  ore  is  chalcopyrite  disseminated  through  porphyry  altered 
by  magnetic  waters  so  as  to  form  an  approximately  self-fluxing 
gangue.  The  ore  will  not  concentrate,  but  is  smelted  in  bulk. 
A  large  part  of  the  mining  has  been  done  in  open  pits  with  steam 
shovels. 

This  company  does  not  issue  a  good  report  to  its  stockholders. 
The  statement  is  too  brief;  it  contains  no  estimate  of  ore  devel- 
oped, nor  does  it  give  any  intimation  of  the  probable  life  of  the 
mine.  The  reports  give  no  figures  about  the  capital,  invested  in 
lands  as  distinguished  from  capital  in  equipment.  On  these 
accounts  it  is  possible  that  the  costs  indicated  may  not  do  the 
property  justice. 

COSTS  PER  TON  AT  GRANBY 

Per  Ton 
Current  operating  cost ;  mining,  smelting,  refining,  and  marketing  for 

2,088,381  tons  treated     $3.39 

Current  construction  2,088,381  tons  treated 0.36 

Carried  forward .  $3.75 


212  THE  COST  OF  MINING 

Per  Ton 

Brought  forward $3.75 

Return  of  $14,000,000  invested  in  lands  and  equipment  at  5  per  cent, 
interest  and  5  per  cent,  annual  amortization ;  this  being  sufficient 
to  extinguish  the  investment  in  15  years  with  an  output  of 
11,200,000  tons 2.00 


Total    $5.75 

On  this  basis  the  selling  cost  of  copper  or  its  equivalent  in 
New  York  is  about  17  cents  a  pound. 

It  is  stated  in  the  reports  that  a  maximum  capacity  of  3500 
tons  a  days,  say  1,200,000  tons  a  year,  has  been  provided.  If 
this  volume  of  operations  can  be  maintained  for  fifteen  years 
the  amortization  charges  on  the  invested  capital  may  be  com- 
puted at  about  $1.16  per  ton  on  18,000,000  tons.  This  will 
equal  3J  cents  per  pound  copper  and  the  total  cost  required  to 
neutralize  the  investment  is  14^  cents  per  pound.  The  idea  can 
be  expressed  somewhat  differently,  as  follows: 

Cost  of  copper  for  current  operation  and  construction  per  Ib  ..  .       11  cents 
Profit  per  ton  required  to  return  capital  in  15  years  with  5  per  cent. 

interest    3.5  cents 

Total  cost  required  at  maximum  output  for  15  years  to  make 

the  investment  justifiable 14.5  cents 

It  is  pertinent  to  remark  that  this  is  what  I  mean  in  all  cases 
by  amortization;  but  in  other  illustrations  I  have  attempted  to 
amortize  only  the  capital  invested  in  actual  plant,  while  in  the 
case  of  the  Granby  the  amortization  covers  the  entire  investment 
in  lands  and  property  besides  plant. 

UTAH  COPPER 

The  actual  production  for  eighteen  months  ending  Decem- 
ber 31,  1908,  was  as  follows,  the  figures  being  the  net  return  free 
from  all  smelter  deductions : 

Pounds  Copper 

Copper  metal    54,051,212 

Gold,  20,072  oz.  equal  to    3,000,000 

Silver,  163,953  oz.  equal  to 665,000 

Total  metallic  output  expressed  in  copper    57,716,212 

Using  the  round  number  of  57,700,000  Ib.  as  a  divisor,  we  may 
calculate  the  cost  as  follows: 


COPPER  MINES   IN  VARIOUS   OTHER   DISTRICTS 


213 


Dollars 

Approximate 
Per  Ton 
Milled 

Per  Ib.  copper 

Operation  (mine  and  mill) 

$2  666  284 

$1  20 

4  448  cents 

Mine  development 

20028 

01 

035 

Prepaid  stripping    

121,103 

.06 

.210 

Freight  on  ore 

658  754 

32 

1.142 

Treatment  and  refining    

1,806,659 

.85 

3.131 

Taxes,  etc  

7,588 

0.012 

Total  operating  
Add  depreciation,  6  per  cent,  of  plant 
cost 

$5,280,416 
387  000 

2.47 
0  12 

9.134 
0670 

Total  cost 

$5  667  416 

2  59 

9804 

The  cost  does  not  correspond  to  that  reported  by  the  com- 
pany because,  instead  of  deducting  the  gold  and  silver  from  the 
cost  of  copper,  as  the  company  does,  I  adopt  the  more  logical 
method  of  calculating  an  equivalent  for  the  gold  and  silver  in 
copper  metal  and  charging  against  the  sum  thus  obtained  the 
total  costs.  The  addition  of  depreciation  is  absolutely  essen- 
tial. It  is  a  matter  of  experience  in  such  plants  that  about  6  per 
cent,  must  be  allowed  for  renewals  and  changes  that  usually  have 
the  appearance  of  new  construction. 

Furthermore,  in  a  theoretical  calculation  of  complete  costs 
we  must  add  the  amortization  of  the  plant.  In  this  case  there 
is  a  guaranteed  life  of  twenty-five  years.  This  means  that  the 
capital  will  be  retired  with  5  per  cent,  interest  by  an  annual 
instalment  of  7  per  cent.  Now  the  total  capital  required  for 
this  business,  outside  of  the  cost  of  the  land  (which  was  prob- 
ably nominal),  averaged  almost  exactly  $5,741,000  on  which  the 
instalments  for  eighteen  months  would  equal  $592,805,  equal  to 
a  trifle  over  1  cent  a  pound.  Add  this  to  the  9.8  cents  obtained 
above  and  we  get  10.8  cents  as  the  actual  cost  of  copper  to 
date. 

Looking  to  the  future  it  is  not  necessary  to  include  the  amor- 
tization in  the  calculation  of  dividends.  It  is,  however,  a  vital 
necessity  in  calculating  the  cost  at  which  the  mine  can  sell 
copper,  for  if  the  owners  were  to  sell  copper,  to  take  this  exam- 
ple, at  say  10^  cents,  because  they  calculate  an  operating  cost 
of  9.8  cents,  they  would  be  in  a  fool's  paradise.  They  would 
be  losing  part  of  their  capital;  burdening  themselves  with  the 


214  THE  COST  OF  MINING 

conduct  of  a  vast  business  for  less  real  return  than  they  could  get 
for  their  money  by  buying  gilt-edged  bonds  and  doing  nothing. 
But  we  must  remember  that  the  period  we  have  reviewed  is 
the  first  eighteen  months  of  the  mine's  history.  It  is  entirely 
likely  that  the  mine  will  be  worked  out  with  an  annual  produc- 
tion averaging  75,000,000  Ib.  The  managers  believe  that  oper- 
ating costs  will  be  under  8  cents,  which  will  change  to  8.5  on  the 
basis  I  have  used.  Let  us  agree  to  that  and  add  an  annual 
depreciation  charge  of  $300,000.  Let  us  say  further  that  the 
capital  employed  will  rise  to  a  net  total  of  $8,000,000.  We  shall 
have  then  the  following  costs: 

Operating    8.5  cents 

Depreciation 4  cents 

Amortization     8  cents 

Total  cost    9.7  cents 

This  means  that  8.9  cents  is  the  dividend  cost  and  9.7  cents 
is  the  metal  selling  cost. 

Owing  to  the  great  prospective  importance  of  the  type  of 
mine  that  it  represents,  and  also  because  it  is  an  example  of  a 
good  report  to  stockholders,  I  have  thought  best  to  reproduce 
here  almost  the  whole  report  of  the  Utah  Copper  Company  for 
the  period  of  eighteen  months  ending  with  the  year  1908.  This 
report  shows  better  than  any  other  statement  I  have  seen,  mat- 
ters that  occupy  the  attention  of  the  management,  the  equip- 
ment, and  plants  required,  and  the  conduct,  in  general,  of  such 
an  enterprise. 

The  problem  involved  is  to  take  a  disseminated  ore  containing 
2  per  cent,  copper  in  the  form  of  chalcocite  from  a  very  large 
deposit,  concentrate  it  with  a  saving  of  70 1  per  cent,  into  one  ton 
for  every  twenty-two  tons  mined,  the  concentrate  running  over 
30  per  cent,  in  copper.  The  company  does  not  smelt  its  own 
ores,  but  has  it  done  by  contract  by  the  Garfield  plant  of  the 
American  Smelter  Securities  Company. 

The  following  report  is  by  the  general  manager,  Mr.  D.  C. 
Jackling  : 

1  These  figures  are  not  being  realized.  The  actual  yield  of  refined  copper 
does  not  seem  to  be  over  20  Ibs.  per  ton.  This  fact  may  invalidate  my  conclu- 
sions as  to  the  cost  of  copper  from  this  type  of  deposit.  See  Chapter  XIII. 


COPPER  MINES   IN  VARIOUS   OTHER   DISTRICTS 


215 


"UTAH  COPPER  COMPANY 
December  31,  1908 
Income  Account 

54,051,212  Ib.  copper  at  .1336  cents     $7,222,406.85 

Debit  difference  in  copper  settlement  for  the 

period,  .0016 87,639.06 

Net  price  applying  for  the  year's  sales,  .1320  .  .  $7,134,767.79 

20,072.18  oz.  gold  at  $20.00  per  oz 401,443.60 

163,952.87  oz.  silver  at  54.76  cents    89,780.33 

Shipments  of  ore  other  than  concentrating  .  . .          37,877.38 

Rents  received 9,300.90 

Interest,  freight,  refunds,  sale  of  power,  etc.    .  9,399.36 

—     $7,682,569.36 

Operation    $2,666,284.44 

Mine  development  20,027.80 

Prepaid  expense — 'Ore  stripping 121,103.20 

Freight  on  ore    658,754.14 

Treatment  and  refining 1,806,658.52 

State  of  New  Jersey,  Annual  License  Tax  ....  4,005.90 

Extraordinary    tailings    expense,    Bingham 

Canyon    3,581.98 

$5,280,415.98 

Net  profits  for  period $2,402,153.38 

Interest  on  bonds $40,755.00 

Dividends  paid 696,387.50 

737,142.50 

Net  surplus  for  18  months  ended  Decem- 
ber 31,  1908    $1,665,010.88 

"UTAH  COPPER  COMPANY 

RECEIPTS  AND  DISBURSEMENTS 

July  1,  1907,  to  December  31,  1908 

Receipts 

Balance  on  hand  July  1,  1907   $35,802.68 

!  (  Issuance  of  214,150  shares  at  $10.00  per  share 2,141,500.00 

(  Premium  on  sale  of  214,150  shares  at  $10.00  per  share   .  .  .      2,141,500.00 

Received  from  sale  of  bonds    1,500,000.00 

Accounts  payable 308,452.40 

United  Metals  Selling  Co 991,899.06 

Net  surplus  for  period 1,665,010.88 


$8,784,165.02 

1  These  items  cover  conversion  of  $4,283,000.00  par  value  bonds  converted 
into  stock  at  $20.00  per  share. 


216 


THE  COST  OF  MINING 


Disbursements 

Additions  to  property  acquired $99,972.41 

Cost  of  developing  and  equipment  of  mine 253,417.41 

Prepaid  expense  —  ore  624,453.02 

Garfield  mill  and  power  plant 840,231.99 

Garfield  ore  reserve 5,244.05 

Accounts  receivable 3,961.50 

General  treasurer  .  .  .• 422,216.33 

Stores  on  hand,  supplies,  copper  in  transit,  etc 2,057,890.93 

Five  bonds  redeemed  in  cash 5,000.00 

Retirement  of  $4,283,000.00  par  value  bonds  by  issuance  of 

stock    4,283,000.00 

Cash  in  banks 188,777.38 

$8,784,165.02 

"COMPARISON  OF  ASSETS  AND  LIABILITIES 
June  30,  1907,  and  December  31,  1908 
Assets 


June  30,  1907 

Dec.  31,  1908 

Decrease 

Increase 

Cost     of     property 

acquired   

$5,762,572.00 

$5,971,138.82 

— 

$208,566.82 

Improvements      as 

follows: 

Garfield  mill  and 

•^ 

power  plant   .  . 

3,164,786.87 

4,005,018.86 

— 

840,231.99 

Copperton  plant 

108,594.41 

— 

$108,594.41 

— 

Mine  surface  equip- 

ment   

57,298.24 

310,715.65 

— 

253,417.41 

Prepaid  expense  - 

ore  

212,467.68 

836,920.70 



624,453.02 

Garfield      ore      re- 

serve     

5,244.05 

5,244.05 

Outside          invest- 

ments at  cost: 

Garfield  Improve- 

ment Co  

40,000.00 

40,000.00 

— 

— 

Garfield       Water 

Co   

100,000.00 

100,000.00 

— 

— 

Accounts  receivable 

90,580.44 

117,623.14 

— 

27,042.70 

Sinking  fund 

23,081.20 



23,081.20 



Storehouse  supplies 

and  fuel    

73,255.71 

289,271.59 

— 

216,015.88 

Equity  in  copper  in 

transit  

425,597.97 

1,275,573.96 

— 

849,975.99 

Cash  in  banks    .... 

35,802.68 

188,777.38 

— 

152,974.70 

$10,094,037.20 

$13,140,284.15 

$131,675.61 

$3,177,922.56 

COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         217 

Liabilities 


Capital    stock    out- 

standing   

$5,118,000.00 

$7,259,500.00 



$2,141,500.00 

First    mortgage 

bonds      out- 

standing   

2,964,000.00 

176,000.00 

$2,788,000.00 

— 

A.S.&R.  Co.  (treat- 

ment and  refin- 

ing charges  not 

yet  due  

47,991.26 

342,698.47 

— 

294,707.21 

Accounts  payable  . 

18,887.36 

37,402.35 

— 

18,514.99 

Sinking    fund    (not 

yet  due)  

16,681.60 

— 

16,681.60 

— 

Hospital  fund    .... 

— 

11,911.80 

— 

11,911.80 

Due      to      General 

Treasurer 

422,216.33 

— 

422,216.33 

— 

Surplus    (amount 

received  above 

par    from    sale 

of  stock  i 

918,000.00 

3,059,500.00 



2,141,500.00 

1  Balance             Net 

Surplus     .  .  . 

588,260.65 

2,253,271.53 

1,665,010.88 

Total  

$10,094,037.20 

$13,140,284.15 

$3,226,897.93 

$6,273,144.88 

1  Income  —  Net  surplus  from  Copperton  Experimental  Plant 

to  June  30,  1907 $588,260.65' 

Net  surplus  for  18  months  ending  December  31, 

1908 1,665,010.88 


$2,253,271.53 

OPERATIONS  AT  THE  MINES 

"Development.  —  In  the  last  annual  report  it  was  stated  that 
the  underground  developments,  on  December  31,  1907,  amounted 
to  approximately  90,000  linear  feet  of  workings.  Since  that  time 
we  have  driven  more  than  ten  miles  of  tunnels,  drifts,  and  raises; 
but,  at  the  same  time,  we  have  destroyed  a  very  large  percentage 
of  our  underground  workings,  partially  by  stoping  operations 
in  connection  with  our  underground  mining,  but  more  largely 
as  the  result  of  the  operations  of  steam  shovels  over  areas  that 
had  been  previously  blocked  out  by  tunneling  and  drifting.  The 
areas  containing  these  workings  have,  to  a  certain  extent,  been 
dug  out  by  steam  shovels,  but  have  to  a  greater  extent  been  caved 
by  heavy  blasting  incident  to  steam  shovel  work,  so  that  they 


218  THE  COST  OF  MINING 

are  not  now  accessible.  As  a  result  of  the  destruction  of  both 
old  and  new  workings  in  the  manner  above  described,  we  have 
not  now  to  exceed  approximately  twenty  miles  of  openings 
available  for  use  in  underground  methods  of  mining,  or  access- 
ible for  inspection. 

"  References  to  the  map  of  the  company's  mining  property 
appended  to  this  report  will  show  the  additional  area  of  fully 
and  partially  developed  ore  resulting  from  the  underground  work 
during  the  period.  In  the  report  for  the  year  ending  June  30, 
1907,  the  statement  was  made  that  the  developed  and  partially 
developed  area  amounted  to  seventy-two  acres.  Developments 
since  then  have  resulted  in  extending  this  area  about  eight  acres, 
so  that  now  the  known  ore  area,  fully  and  partially  developed, 
is  approximately  eighty  acres.  The  ore  thicknesses  and  values 
of  this  additional  territory  are,  generally  speaking,  similar  to 
those  described  in  the  former  report,  so  that  the  new  develop- 
ments have  resulted  in  additional  ore  reserves  to  the  extent  of 
about  8,000,000  tons,  or  at  a  rate  during  the  period  of  over  three 
times  the  rate  at  which  ores  were  extracted  for  reduction.  The 
net  result  of  the  developments  we  have  made  during  the  period 
has  been  that  fully  developed  ore  remains  approximately  as 
stated  in  our  last  annual  report,  viz.,  20,000,000  tons,  as  the  area 
of  this  class  of  ore  has  been  increased  to  an  extent  that  will  more 
than  offset  the  quantity  of  ore  mined. 

"The  two  classes  of  partially  developed  ore,  described  in  the 
former  report,  have  been  increased  in  the  aggregate  to  the  extent 
of  approximately  8,000,000  tons,  as  above  stated,  so  that  we 
now  estimate  60,000,000  tons  in  these  two  classes  of  reserves. 
In  other  words,  of  fully  developed,  partially  developed  and 
reasonably  assured  ore,  the  total  amounts  to  about  80,000,000 
tons.  Of  this  total  tonnage,  65,000,000  tons  can  be  classed  as 
of  the  better  or  normal  grade,  averaging  about  2  per  cent,  copper, 
and  15,000,0000  tons  as  of  the  lower  grade,  approximating  1^ 
per  cent,  copper.  In  addition  to  this,  we  have  the  lower  zone, 
as  described  in  the  previous  annual  report,  the  average  value  of 
which  has  been  indicated  to  only  a  limited  extent  by  diamond 
drilling,  but  which  is  estimated  to  contain  a  minimum  of  40,000,- 
000  tons  that  will  probably  average  1^  per  cent.  In  discussing 
the  above  quantities  throughout,  consideration  should  be  given 
to  the  fact  that  the  stated  figures  include  the  quantities  of  ore 


COPPER  MINES   IN   VARIOUS   OTHER   DISTRICTS 


219 


mined  during  the  fiscal  period.  This  would  amount,  in  percent- 
age, to  approximately  3  per  cent,  of  the  above  described  three 
classes  of  ore  aggregating  80,000,000  tons  reserves. 

"  All  the  development  done  during  the  period  has  been  on  the 
easterly  end  of  the  property  and  on  both  sides  of  the  canyon, 


a 

a? 


Quartzite 

North  End  Line  Property 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         221 

but  the  larger  part  of  it  has  been  on  the  south  side  of  the  canyon, 
in  the  southeasterly  portion  of  the  company's  territory.  The 
ore-bearing  area  is  still  being  extended  in  that  direction. 

"Stripping.  —  Stripping  operations  since  their  commence- 
ment, in  August,  1906,  have  resulted  in  the  removal  of  1,705,322 
cu.  yd.  of  capping.  Of  this  amount,  1,335,233  yd.  have  been 
removed  during  the  fiscal  period  under  discussion.  During  the 
first  six  months  of  the  fiscal  period,  367,950  cu.  yd.  were  removed; 


FIG.  11.  — Steam  shovels  at  work  in  pit  of  Utah  Copper  Company, 
Bingham,  Utah. 

during  the  second  six  months,  446,460  cu.  yd.  were  removed,  and 
during  the  last  six  months  of  1908,  520,823  cu.  yd.  were  removed. 
"The  total  area  over  which  stripping  operations  have  been 
conducted  to  date  is  19.7  acres.  The  average  thickness  of  cap- 
ping, as  disclosed  by  these  operations,  remains  the  same  as  that 
stated  in  our  last  annual  report  —  approximately  70  ft.,  corre- 
sponding to  113,000  cu.  yd.  per  acre.  The  total  amount  removed 
is,  therefore,  equivalent  to  stripping  of  approximately  15  acres, 
and,  at  the  present  time,  the  actual  area  completely  stripped  is 
slightly  in  excess  of  7  acres. 


222  THE  COST  OF  MINING 

"The  average  cost  of  stripping,  throughout  the  entire  opera- 
tions from  their  beginning  in  1906,  has  been  approximately  32 
cents  per  cubic  yard;  this  cost  covering  only  the  removal  of  cap- 
ping and  its  conveyance  to  available  dumping  ground.  Apply- 
ing this  cost  to  the  average  thickness  of  stripping  removed  and 
ore  uncovered,  the  cost  per  ton  of  ore  uncovered  is  somewhat 
less  than  4  .cents.  Stripping  operations  have  been  more  expen- 
sive and  difficult  in  the  past  than  they  will  be  in  the  future,  on 
account  of  the  very  limited  area  upon  which  the  shovels  could 
work  and  the  expensive  tracks  it  was  necessary  to  build  in  start- 
ing these  operations  in  the  narrow  canyon.  As  we  develop  more 
room,  the  rate  at  which  shovels  can  operate  will  be  increased, 
and  the  cost  of  shoveling  correspondingly  reduced;  but  the  ex- 
pected decrease  in  the  actual  cost  of  loading  the  material  will 
probably  be  offset  by  the  increased  cost  of  hauling  the  waste 
material  for  greater  distances,  so  that  it  may  be  expected  that 
our  stripping  costs  will  remain  about  the  same  as  in  the  past. 

"Since  the  last  annual  report,  we  have  secured  by  purchase 
and  lease  the  surface  rights  of  about  120  acres  of  ground,  outside 
of  our  own  property,  for  dumping  purposes.  Of  this  total  area, 
75  per  cent,  was  acquired  by  purchase  and  the  remainder  by 
lease.  The  total  dumping  capacity  of  this  surface  amounts  to 
6,330,000  cu.  yd.,  or  the  equivalent  of  the  capping  overlying  56 
acres  of  ore,  using  the  average  thickness  of  70  ft.  so  far  deter- 
mined. As  a  matter  of  total  capacity,  the  ground  already  se- 
cured will  be  more  than  is  necessary  to  accommodate  any  amount 
of  capping  that  we  will  wish  to  deposit  in  this  vicinity,  for  the 
reason  that  plans  are  now  under  way  to  dispose  of  the  capping 
in  another  and  profitable  manner,  as  will  be  hereafter  referred 
to  in  this  report. 

"Mining.  —  Of  the  total  ore  mined  during  the  fiscal  period, 
33.2  per  cent,  came  from  underground,  and  66.8  per  cent,  from 
steam  shovels.  During  the  first  six  months  of  the  period,  the 
percentages  were  39.6  per  cent,  from  underground,  and  60.4  per 
cent,  from  shovels.  During  the  following  six  months,  the  per- 
centages were  34.6  and  65.4,  respectively.  During  the  six  months 
ending  December  31,  1908,  the  percentages  were  28.7  and  71.3. 
During  the  last  three  months  of  1908,  the  percentages  of  under- 
ground and  steam  shovel  ore  were  25  per  cent,  and  75  per  cent, 
respectively.  These  figures  are  given  to  indicate  the  gradual 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         223 

decrease  of  underground  mining;  or,  more  properly,  the  steady 
increase  in  the  quantity  of  ore  mined  by  steam  shovels. 

"The  increase  in  the  volume  of  ore  mined  by  steam  shovels 
is  reflected  directly  in  a  corresponding  decrease  in  our  mining 
costs.  The  average  cost  of  both  steam  shovels  and  underground 
ore  for  the  first  six  months'  period  above  described  was  43  cents; 
for  the  second  period,  it  was  35  cents;  for  the  third  period,  30 
cents.  The  average  costs  stated  cover,  respectively,  the  total 
costs  of  every  nature  at  the  mine,  including  development,  as 
well  as  their  proper  proportions  of  all  general  and  fixed  charges, 
such  as  office  expenses,  taxes,  and  insurance.  The  average  costs 
for  the  entire  period,  as  applying  to  the  two  different  methods 
of  mining,  were  66J  cents  per  ton  for  all  ore  mined  underground 
and  19J  cents  per  ton  for  all  ore  mined  by  steam  shovel  —  a 
saving  in  favor  of  the  steam  shovel  method  of  47  cents  per  ton. 

"  As  has  been  previously  stated,  the  cost  of  removing  the  cap- 
ping from  a  ton  of  ore,  as  shown  by  our  entire  experience  in  the 
past,  amounts  to  approximately  4  cents.  The  net  difference  in 
favor  of  the  steam  shovel  method,  therefore,  becomes  43  cents 
per  ton;  this  applying  to  practically  all  the  steam  shovel  mining 
we  have  done,  as  we  only  mined  a  few  thousand  tons  by  steam 
shovels  before  July  1,  1907. 

"  From  the  beginning  of  stripping  operations  to  date,  the  equiv- 
alent of  15  acres  of  ore  has  been  stripped,  and  the  total  cost  of 
all  this  work  has  been  about  $550,000.  It  is  proper  to  add  to 
this,  however,  a  proportion  of  the  cost  of  grading  and  laying  rail- 
way tracks  about  the  property  and  to  our  dumping  grounds  for 
the  disposition  of  capping.  The  total  net  cost  of  such  tracks, 
and  of  all  other  construction  incident  to  stripping  operations 
up  to  date,  including  general  expenses,  has  been,  after  crediting 
retirement  fund,  approximately  $285,000.  If  we  charge  all  the 
proper  proportion  of  general  expenses  and  20  per  cent,  of  all 
the  construction  costs  to  the  stripping  operations,  the  total  cost, 
to  date,  becomes  about  $690,000.  It  would  not  be  proper  to 
charge  more  than  20  per  cent,  of  these  construction  costs  to  the 
stripping  already  done,  because  less  than  that  percentage  of  the 
area  for  which  these  facilities  were  provided  has  been  stripped. 
The  43  cents  per  ton  saved  on  ore  mined  during  the  fiscal 
period  by  steam  shovels,  as  against  what  it  would  have  cost  to 
mine  the  same  quantity  of  ore  from  underground,  amounts  to 


224  THE  COST  OF  MINING 

approximately  $695,000.  It  therefore  appears  that  had  we 
charged  the  entire  cost  of  all  our  stripping  operations,  from  the 
date  of  their  inception  in  1906  up  to  the  present  time,  against  the 
steam  shovel  ore  recovered  in  eighteen  months  only,  it  would  still 
have  been  more  economical  to  mine  by  the  steam  shovel  method 
than  by  the  underground  method;  or,  considered  in  another  way, 
we  have  stripped  15,000,000  tons  of  ore,  and  have  mined  only 
slightly  more  than  10  per  cent,  of  that  quantity  with  steam 
shovels,  but  the  entire  cost  of  stripping  the  total  quantity  of  ore 
could  be  charged  against  the  mining  of  one-tenth  of  it  and  still 
the  result  would  show  the  steam  shovel  method  of  mining  our 
ores  to  be  the  more  economical. 

"Our  costs  of  steam  shovel  mining  will  decrease,  rather  than 
increase,  in  the  future,  and  it  is  consequently  quite  evident  that 
our  best  interests  lie  in  decreasing  as  rapidly  as  possible  the  scope 
of  underground  mining  and  correspondingly  increasing  our 
steam  shovel  output.  It  will  be  necessary,  for  some  years  to 
come,  to  do  some  underground  work,  but  we  will  probably  be 
mining  fully  90  per  cent,  of  our  ore  with  steam  shovels  by  the 
end  of  1909,  and  the  underground  method,  as  applying  to  any- 
thing but  the  development  and  mining  of  isolated,  and  compar- 
atively small,  bodies  of  ore,  will  be  gradually,  and  as  rapidly  as 
possible,  discontinued. 

"Up  to  the  present  time,  surface  mining  operations  have  been 
seriously  hampered  by  our  inability  to  secure  from  the  company 
transporting  our  ores  to  the  mills  an  adequate  and  regular  sup- 
ply of  cars,  such  as  to  enable  us  to  continuously  and  most  eco- 
nomically operate  our  ore  shovels.  Our  surface  workings  have 
been  developed  to  such  an  extent  that  by  the  end  of  1909  we 
should  have  no  difficulty  in  producing  regularly  10,000  tons  per 
day,  if  an  additional  unit  to  the  Garfield  plant  should  be  decided 
upon,  thus  bringing  our  milling  capacity  up  to  the  tonnage  stated. 
In  the  meantime,  we  could  increase  our  output  gradually  to  the 
extent  of  supplying  tonnage  for  the  sections  of  the  new  unit  as 
rapidly  as  they  could,  in  all  probability,  be  completed. 

"The  ores  that  have  been  mined  up  to  date  by  steam  shovel- 
ing have  not  been  as  high  grade  as  the  normal  average  of  the 
property,  because  of  the  necessity  of  including  with  them  con- 
siderable quantities  of  the  partially  oxidized  and  lower  grade  cap- 
ping. Before  steam  shovel  operations  were  begun,  some  parts 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         225 

of  the  area  where  we  are  now  working  were  mined  out  for  a  thick- 
ness of  20  to  40  ft.,  along  or  below  the  dividing  plane  between 
capping  and  ore.  As  this  mining  was  done  by  caving,  the  cap- 
ping settling  into  the  stopes  increased  the  irregularity  of  the 
line  between  ore  and  capping,  and  made  it  impossible  to  keep 
the  underlying  ore  as  clean  as  we  would  have  otherwise  been 
able  to  do.  Moreover,  aside  from  this  occurrence,  which  has 
aggravated  the  condition,  the  dividing  line  between  ore  and  cap- 
ping is  naturally  very  irregular,  and  it  is  impossible  to  entirely 
remove  all  the  oxidized  material  without  wasting  some  good 
ore.  It  is  therefore  necessary  to  continue  taking  some  of  this 
low-grade  material  into  the  ore,  until  such  time  as  the  first  cut 
from  off  the  top  of  the  ore  has  been  removed  over  a  considerable 
area;  in  fact,  this  condition  will  always  apply  to  newly  stripped 
areas.  This  feature  is  the  only  one  of  disadvantage  that  we  have 
encountered  in  steam  shovel  mining,  but,  in  the  long  run,  there 
will  be  advantages  which  will  very  much  more  than  offset  it  — • 
the  principal  one  being  that  by  this  method  of  mining  our  opera- 
tions will  slowly,  but  gradually,  become  more  economical,  and, 
in  the  end,  we  will  have  recovered  100  per  cent,  of  our  ores; 
whereas,  by  any  other  method  of  mining,  it  would  be  impossible 
to  avoid  losing  a  considerable  percentage  of  them. 

11  Equipment.  —  Since  our  last  annual  report  we  have  added 
to  the  mine  equipment  two  steam  shovels,  making  eight  in  all; 
two  locomotives,  making  seventeen  in  all;  and  have  extended 
our  railroad  tracks  for  mining  and  stripping  purposes  to  a  total 
of  9.2  miles.  During  the  year  1909  we  shall  add  to  our  present 
equipment  at  least  one  more  shovel  and  two  more  locomotives, 
and  shall  construct  about  6.8  miles  of  additional  standard  gage 
railway  for  handling  capping. 

OPERATIONS  AT  THE  MILLS 

"Garfield  Plant. — In  our  last  annual  report,  it  was  stated 
that  four  sections  of  the  Garfield  plant  were  in  commission. 
Four  additional  sections  were  started  —  one  each  in  the  months 
of  August,  September,  November,  and  December,  1907;  and  the 
remaining  four,  one  each  in  the  months  of  March,  April,  July,  and 
November,  1908.  During  the  fiscal  period  there  was  in  opera- 
tion the  equivalent  of  8J  sections  for  the  entire  period,  or  about 
71  per  cent,  of  the  plant.  However,  the  difficulties  experienced 


226  THE  COST  OF  MINING 

in  obtaining  tonnage  for  the  plant,  principally  through  the  lack 
of  proper  transportation  facilities  and  service,  resulted  in  our 
only  being  able  to  provide  77  per  cent,  of  the  rated  capacity 
of  that  part  of  the  plant  prepared  for  continuous  operation,  as 
above  stated,  or  about  55  per  cent,  of  the  capacity  that  the  plant 
is  now,  and  has  been  since  November,  1908,  prepared  to  handle. 
Had  we  been  able  to  secure  tonnage,  the  sections  of  the  plant 
could  have  been  started  up  more  rapidly  and  the  entire  plant  put 
in  commission  at  an  earlier  date. 

"Copperton  Plant. — The  Copperton  plant  also  suffered  from 
a  deficiency  of  tonnage,  but  not  to  the  extent  that  applied  to 
the  Garfield  plant,  partially  for  the  reason  that  it  is  closer  to  the 
mines.  Of  the  total  tonnage  treated  at  both  mills  during  the 
period,  83  per  cent,  went  to  the  Garfield  mill  and  17  per  cent,  to 
the  Copperton  mill. 

"Production.  —  The  total  gross  output  of  copper  at  both  plants 
for  the  period  was  56,895,998  Ib.  of  copper  contained  in  concen- 
trates, resulting  in  a  net  production  of  54,051,212  Ib.  after  smelter 
deductions  were  made.  The  concentrates  produced  also  con- 
tained 182,160  oz.  of  silver  and  20,072  oz.  of  gold.  The  average 
grade  of  concentrates  for  the  period  was  approximately  27  per 
cent. 

"Of  the  total  gross  production  of  copper  above  mentioned, 
43,873,918  Ib.  were  produced  in  the  twelve  months  of  1908,  this 
being  77  per  cent,  of  the  total  for  the  period.  Dividing  the  eigh- 
teen months  into  periods  of  six  months,  the  respective  produc- 
tions were  as  follows: 


Pounds 

Per  Cent. 

July  1  to  D6C6rnber  31 

1907 

13  022  080 

23 

January  1  to  Jun6  30 

1908        

20.096,329 

35 

July  1  to  D6C6mber  31 

1908 

23  777  589 

52 

Total 

56  895  998 

100 

"Had  we  been  able  to  secure  throughout  the  period  the  full 
capacity  of  the  71  per  cent,  average  of  the  Garfield  plant  that 
was  in  operation,  we  would  have  produced  at  that  plant  alone 
approximately  62,000,000  Ib.  —  a  total,  for  both  plants,  of  about 
71,000,000  Ib.  for  the  period;  or  an  average  of  nearly  4,000,000 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         227 

Ib.  per  month.  If  our  entire  Garfield  plant,  which  is  now  in 
operation,  could  be  supplied  with  its  capacity  of  6000  tons  per 
day,  and  its  operation  should  result  in  the  same  percentage  of 
recovery  we  have  experienced  in  the  period  under  discussion,  and 
upon  the  same  grade  of  ore,  the  output  for  both  plants  would  be 
at  the  rate  of  96,000,000  Ib.  for  eighteen  months,  or  an  average 
of  5J  million  pounds  per  month,  corresponding  to  a  production 
of  64,000,000  Ib.  per  annum.  This  is  what  we  may  expect  to 
do  in  the  immediate  future,  provided  transportation  for  the 
required  tonnage  can  be  supplied;  in  fact,  we  can  do  somewhat 
better  than  this  on  the  same  grades  of  ore,  if  we  can  have  trans- 
ported all  the  tonnage  needed,  as  the  Copperton  plant  can  also 
take  more  tonnage  than  it  has  been  receiving  in  the  past. 

"It  is  to  be  remembered  that  the  results  of  the  period  under 
discussion  have  been  achieved  on  an  ore  containing  4  Ib.  less  of 
copper  per  ton  than  the  average  normal  contents  of  our  ore.  In 
addition  to  this,  because  of  the  low  grade  and  oxidized  mate- 
rial that  has  been  taken  into  the  ore  through  contamination  of 
the  steam  shovel  output  by  capping,  the  ores  have  contained  an 
average  of  fully  5  Ib.  of  their  copper  contents  in  oxidized  min- 
erals, of  which  only  indifferent  percentages  could  be  recovered. 
Both  the  grade  of  ore  and  the  percentage  of  copper  recovered 
will  improve  gradually  as  cleaner  ore  is  procurable,  as  a  result 
of  the  extension  of  completely  stripped  areas. 

"Cost  of  Production.  --The  average  price  applying  to  our 
sales  of  copper  for  the  entire  period  was  13.2  cents.  The  average 
cost  per  pound  was  8.85  cents,  this  being  based  upon  the  net 
pounds  of  copper  resulting  after  smelter  deductions  and  allow- 
ances were  provided  for,  and  including  all  expenses  of  transpor- 
tation, refining,  and  disposition  of  the  metal. 

"The  deficiency  of  tonnage,  as  applying  particularly  to  the 
Garfield  plant,  has  resulted  in  the  cost  per  pound  of  copper  being 
fully  a  cent  higher  than  it  would  have  been  had  we  been  able  to 
secure  full  tonnage  for  even  the  71  per  cent,  of  the  plant  averag- 
ing in  operation.  As  formerly  stated,  we  were  only  able  to  mill 
77  per  cent,  of  the  capacity  of  the  portion  of  the  plant  in  opera- 
tion. The  additional  23  per  cent.,  which  we  were  unable  to 
mill,  owing  to  the  transportation  difficulties  before  mentioned, 
could  have  been  treated  at  little  or  no  additional  cost  for  labor, 
and,  in  fact,  not  so  great  a  cost  per  ton,  because  a  shortage  of 


228  THE  COST  OF  MINING 

ore  involves  us  in  more  expensive  methods  of  handling  it  through 
our  ore  bins.  We  therefore  would  have  saved  the  milling 
labor  cost  on  this  additional  tonnage,  which  amounts  to  more 
than  one  cent  per  pound  of  copper  produced.  If  both  plants 
could  have  been  operated  at  their  fullest  capacity,  a  still  greater 
reduction  would  have  been  made  in  the  per  pound  cost.  Our 
other  costs  would  not  have  increased  in  direct  proportion,  as, 
for  instance,  the  mine,  if  it  had  been  able  to  load  ore  continuously, 
could  have  done  so  at  a  considerably  decreased  cost  per  ton. 

"  Capacity  of  the  Gar  field  Plant.  —  We  have  been  able  to  oper- 
ate the  Garfield  plant  at  full  capacity  only  for  short  periods  since 
it  was  completed,  on  account  of  our  inability  to  transport  the 
tonnage.  For  a  few  days  at  a  time,  however,  we  have  demon- 
strated that  it  can  handle  continuously  a  greater  tonnage  than 
its  rated  capacity.  This  determination  has  also  been  checked 
by  the  capacity  of  the  individual  sections,  which  have  proven 
themselves  capable  of  treating  more  than  their  rated  tonnage. 
No  difficulties  have  been  experienced  in  the  operation  of  the 
plant,  and  no  changes,  other  than  in  the  way  of  unimportant 
details,  have  been  found  necessary.  Considering  the  quality  of 
ore  we  have  been  reducing,  its  operation  has  been,  and  is,  en- 
tirely satisfactory. 

"  Power  Plant.  — The  construction  and  operation  of  our  own 
power  plant,  to  provide  power  for  the  entire  enterprise,  has  proven 
of  great  advantage  and  economy  in  many  ways.  We  are  assured 
of  a  constant  and  uniform  supply  of  power  for  continuous  opera- 
tion at  all  points,  and  the  cost  of  power  at  the  Copperton  plant 
and  at  the  mines  at  Bingham  has  been  very  much  reduced  over 
that  applying  formerly,  when  power  was  generated  at  Copperton 
for  the  operation  of  that  plant  and  purchased  from  others  for 
the  operation  of  the  mine.  As  stated  in  our  former  annual 
report,  the  power  plant  at  Garfield  has  a  greater  capacity  than 
is  necessary  for  the  operation  of  our  milling  plants  at  their  pres- 
ent capacity,  and  it  will  therefore  be  unnecessary  to  provide 
additional  power  in  connection  with  another  3000-ton  unit  at 
the  Garfield  plant  when  such  addition  is  made. 

11  Dialer  Supply.  —  Up  to  the  present  time,  the  springs  owned 
by  the  company,  adjacent  to  the  Garfield  plant,  have  produced 
ample  water  for  any  tonnage  we  have  handled,  and  it  is  believed 
that  they  will  furnish  sufficient  for  the  full  capacity  of  the  plant, 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         229 

without  making  it  necessary  for  us  to  resort  to  the  use  of  our 
proportion  of  the  water  we  are  entitled  to  take  from  the  Gar- 
field  Water  Company.  We  therefore  have  demonstrated  con- 
clusively that  our  total  water  supply  will  be  ample  for  very  much 
greater  tonnage  than  we  are  now  prepared  to  mill. 

"  Transportation.  —  A  number  of  references  have  been  made 
in  this  report  to  the  difficulty  we  have  experienced  in  securing 
adequate  transportation  facilities,  as  provided  for  under  our 
contract  with  the  Rio  Grande  Western  Railway  Company.  Our 
losses,  and  the  disadvantages  under  which  we  have  operated,  as 
a  result  of  the  failure  on  its  part  to  give  us  the  desired  and  neces- 
sary service,  have  been  greater  than  would  be  indicated  by  the 
direct  deficiency  in  tonnage  that  we  desired  to  mine  and  mill, 
but  which  the  railway  company  was  not  prepared  to  transport, 
for  the  reason  that  the  tonnages  that  have  been  delivered  to  the 
mills  have  been  handled  at  a  disadvantage  and  at  an  extra  cost. 
We  have  used  every  effort  to  induce  the  railway  people  to  give 
us  better  service,  but,  so  far,  without  very  much  encouraging 
result,  and  we  have,  therefore,  located  and  surveyed  a  line  for 
a  railroad  of  our  own  between  the  mines  and  mills.  This  loca- 
tion is  shown  on  the  appended  map  of  the  Bingham  and  Garfield 
territory.  Negotiations  are  now  pending,  which,  if  consum- 
mated, will  relieve  the  situation,  and  give  us  the  transportation 
facilities  we  require.  If  these  negotiations  fail,  I  recommend 
that  construction  be  commenced  on  our  own  railway  at  an  early 
date. 

"General  Remarks.  —  In  a  former  portion  of  this  report,  ref- 
erence was  made  to  a  proposed  method  of  disposing  of  capping. 
We  have  found  that  the  1,705,322  cu.  yd.  of  capping  so  far  re- 
moved from  our  orebodies  average  not  quite  1  per  cent,  copper. 
Experiments  conducted  some  years  ago,  and  since  verified,  demon- 
strate that  the  larger  part  of  this  copper  is  contained  in  such 
forms  as  can  be  extracted  by  a  simple  leaching  process. 

"  As  soon  as  weather  conditions  will  permit,  an  open-air  plant, 
of  moderate  capacity,  will  be  constructed  at  the  Garfield  mill, 
and  the  proposed  metallurgy  of  this  material  demonstrated  on 
a  fairly  liberal  working  scale.  If  this  experiment  proves  that 
our  former  results  along  this  line  of  investigation  are  reliable, 
it  is  proposed  to  build  a  very  large  leaching  plant  in  which  to 
treat,  along  the  general  lines  suggested,  the  capping  removed 


230  THE  COST  OF  MINING 

from  the  property.  The  chemicals  necessary  in  the  proposed 
method  of  treatment  should  be  produced  cheaply,  as  a  by-product, 
at  any  of  the  smelters  adjacent  to  Salt  Lake  City." 

NORTHERN  CALIFORNIA  COPPER  MINES 

During  the  last  twelve  years  a  considerable  output  of  copper 
has  been  obtained  in  Shasta  County  from  a  number  of  pyrite 
deposits  that  are  described  as  occurring  in  zones  of  intensely 
crushed  granitic  porphyries.  The  pyrite  masses  have  been 
considerably  enriched  by  the  leaching  of  copper  from  the  upper 
portions  and  the  deposition  of  it  in  a  lower  part  of  the  same 
deposit.  It  is  to  be  inferred  that  the  original  pyrites,  below  the 
zone  of  enrichment,  are  pretty  low  grade,  probably  too  low  in 
many  cases  to  be  payable.  The  following  description  of  the 
industry  is  copied  from  the  report  on  the  "  Production  of  Copper 
in  1907,"  by  L.  C.  Graton  of  the  U.  S.  Geological  Survey.  The 
output  of  copper  for  that  year  is  stated  at  28,000,000  Ib. 

"The  ores  smelted  in  1907  yielded  approximately  3  per  cent, 
of  copper.  The  yield  per  ton  in  gold  was  about  $1.30  and  in 
silver  2.1  oz.,  or  $1.40,  which  combined  are  equivalent  to  4.5 
cents  per  pound  of  copper.  In  the  aggregate  several  million  tons 
of  ore  are  blocked  out  in  the  mines  of  the  Balaklala,  the  Bully 
Hill,  the  Mammoth,  the  Mountain,  and  the  Trinity  companies. 
The  limits  of  these  orebodies  are  now  pretty  well  defined,  and  it 
is  doubtful  if  new  bodies  can  be  discovered  as  rapidly  as  the  pres- 
ent ones  are  exhausted.  The  first  large  body  to  be  worked  in 
the  district,  that  at  Iron  Mountain,  is  now  nearly  worked  out, 
and  in  spite  of  the  fire  which  has  been  burning  for  several  years 
practically  all  the  ore  will  be  extracted. 

"  Most  of  the  orebodies  thus  far  discovered  are  developed  by 
workings  not  more  than  500  ft.  deep,  but  the  Great  Western 
workings,  in  the  Afterthought  district,  exceed  this  depth,  and  in 
the  Bully  Hill  district  the  lowest  level  is  about  900  ft.  below  the 
outcrop.  Owing  to  the  rugged  topography,  tunnels  afford  easy 
access  to  the  orebodies,  but  in  a  few  places  winzes  from  these 
tunnels  are  required.  Open  cutting  is  employed  in  part  at  the 
Balaklala  and  the  Afterthought  mines.  Water  is  not  trouble- 
some. Up  to  the  present  time  square  setting  has  been  chiefly 
employed.  At  the  Mammoth  mine  the  horizontal  slicing  system, 
with  subsequent  caving,  is  employed,  and  the  quantity  of  timber 


COPPER  MINES   IN  VARIOUS   OTHER   DISTRICTS         231 

required,  which  was  large  at  the  start,  is  gradually  being  less- 
ened. Methods  requiring  less  timber  may  be  employed  in  the 
mines  that  are  now  in  the  development  stage.  Native  timber 
is  used.  Electric  power  is  employed  almost  exclusively  and  is 
derived  from  the  lines  of  the  Northern  California  Power  Com- 
pany. Much  of  the  coke  comes  from  Australia.  The  Southern 
Pacific  Railroad  crosses  the  district.  The  Iron  Mountain  and 
Hornet  mines  are  connected  with  it  by  a  private  railway,  and  the 
Mammoth  by  an  aerial  tramway,  which  has  been  replaced  by  a 
combination  steam  and  electric  road.  An  aerial  tram  connects 
the  Balaklala  and  Trinity  mines  with  the  Balaklala  smelter  at 
Coram.  The  Sacramento  Valley  and  Northeastern  Railway  was 
completed  to  the  Bully  Hill  district  early  in  1908.  Work  has 
been  begun  on  a  line  to  the  Afterthought  district.  European 
labor  is  employed  chiefly. 

11  Pyrite  smelting  is  now  applied  almost  exclusively  to  the  ores 
and  is  very  successful.  Even  the  zincky  ores  of  the  Afterthought 
region  are  handled  by  the  aid  of  a  hot  blast.  Some  experiments 
are  under  way  to  save  the  zinc  now  lost  at  this  plant,  and  some 
steps  in  this  direction  may  be  undertaken  at  Bully  Hill  also. 
The  Mammoth  Company  was  the  largest  producer  of  the  year, 
but  turned  out  only  matte,  which  was  converted  at  the  United 
States  smelter  in  the  Salt  Lake  Valley.  The  construction  of 
converters,  as  well  as  of  two  additional  blast  furnaces,  however, 
was  practically  completed  in  1907.  During  that  year  the  fine 
ore  was  shipped  mostly  to  sulphuric-acid  works  near  San  Fran- 
cisco, where  the  resulting  cinders  were  smelted  for  their  copper. 
The  Mountain  Copper  Company,  owing  to  the  raising  of  the 
injunction  against  its  Keswick  plant,  treated  part  of  its  output 
at  that  smelter  and  part  at  its  works  at  Martinez,  on  San  Fran- 
cisco Bay,  where  it  has,  in  addition  to  a  small  electrolytic  refin- 
ery, a  sulphuric  acid  and  fertilizer  plant  that  utilizes  phosphate 
from  Utah  and  Idaho.  The  Afterthought  smelter  shipped  its 
matte  to  Utah  for  conversion.  Some  Shasta  County  copper  ore 
was  treated  at  the  Garfield  smelter.  The  Bully  Hill  smelter, 
which  has  been  idle  since  early  in  1906,  was  enlarged  and  equipped 
for  pyritic  smelting.  A  reverberatory  was  also  added  for  the 
treatment  of  fines.  Work  was  actively  carried  on  by  the  Bala- 
klala Company  in  the  construction  of  its  new  1500-ton  smelter 
until  October,  when  construction  was  stopped,  not  to  be  resumed 


232  THE  COST  OF  MINING 

until  1908.  This  plant,  which  will  treat  the  Balaklala  and 
Trinity  ores,  will  make  matte,  which  may  be  converted  at  the 
Mammoth  works  pending  a  decision  regarding  the  resumption  of 
construction  of  the  San  Bruno  smelter." 

The  United  States  Smelting,  Refining  &  Mining  Company 
gives  no  information  worth  speaking  of  about  its  operating 
results.  This  is  unfortunate,  for  their  Mammoth  mine  is  now  the 
largest  producer  in  Northern  California. 

The  only  report  I  have  seen  upon  the  mining  operations  of 
this  district  is  that  of  the  First  National  Copper  Company.  This 
concern  took  over  in  1908  the  stock  of  .the  Balaklala  Consoli- 
dated Copper  Company,  which  had  evidently  been  organized 
on  an  inflated  basis.  The  new  company  with  a  paid-up  capital 
of  $1,500,000,  bought  all  the  stock  of  the  old  one,  which  was 
capitalized  at  $10,000,000.  The  comparison  of  the  balance 
sheets  of  the  two  companies  is  rather  amusing.  The  First 
National  Company  has  no  liabilities  to  speak  of  except  its  own 
capital  stock,  and  no  assets  except  the  capital  stock  of  the 
Balaklala,  each  amounting  to  $1,500,000.  Turning  to  the  Balaklala 
balance  sheet  we  discover  " Mines  and  Mining  Property"  put 
down  at  $8,688,777.05.  This  item  was  evidently  a  fancy  price 
put  upon  the  undeveloped  and  unequipped  mining  claims  —  a 
good  example  of  mining  finance  in  boom  times.  It  is  also  a  good 
example  of  the  wisdom  of  keeping  the  item  of  real  estate,  the 
opportunity  to  mine,  out  of  one's  computations  of  mining  cost. 

Other  assets  on  the  Balaklala  balance  sheet  undoubtedly 
represent  real  investments,  as  follows: 

Cost  of  outside  properties $37,015.77 

MINE  CONSTRUCTION: 

Air  drill  equipment $24,759.23 

Locomotives  and  cars 18,956.23 

Aerial  tramway  and  connections 202,499.21 

Buildings 49,985.49 

Teams  and  equipment 1,699.43          ^  ^  ^ 

SMELTER  CONSTRUCTION: 

Smelter    $873,682.30 

Converter    102,512.60 

Steam  railroad 83,279.41 

Teams  and  equipment    3,931.28 

1,063,405.59 

Property  in  dwellings,  etc 88,346.55 

Total  plant    $1,481,667.50 

There  is  in  addition  working  capital  in  inventories,  supplies 

and  cash,  approximately    $600,000.00 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         233 

We  might  fairly  add  to  this  about  $400,000  for  the  cost  of 
developing  the  mine  and  then  the  total  cost  of  starting  the 
enterprise  will  amount  to  approximately  $2,500,000. 

The  president  of  the  company  has  the  following  to  say  in 
the  first  annual  report: 

"  During  the  year  we  operated  the  mine  for  sixty  days  and 
the  smelter  for  fifty-two  days.  In  the  commencement  of  opera- 
tions we  expected  to  find  a  number  of  things  that  would  require 
alterations  and  would  more  or  less  delay  us  in  getting  down  to 
a  working  basis.  I  am  glad  to  say  that  we  are  gradually  over- 
coming all  difficulties  and  are  now  producing  blister  copper. 

"  Attention  is  called  to  the  fact  that  we  only  operated  part  of 
two  months  and  one  full  month,  and  our  expenses  are  for  three 
full  months. 

"  Commencing  operations  we  had  considerable  waste  in  open- 
ing our  drifts,  which  has  reduced  the  value  of  our  ores,  but  all 
indications  are  that  the  ore  developed  will  average  about  2.7 
per  cent,  copper,  .025  oz.  gold,  .75  oz.  silver. 

"Our  costs,  based  on  present  operations,  will  be  materially 
reduced  when  we  are  mining  and  smelting  to  our  capacity  of 
1250  tons  of  ore  per  day." 

At  average  prices  the  ore  above  mentioned  would  contain 
the  equivalent  of  60  Ib.  copper  per  ton.  It  is  not  stated  whether 
this  is  the  actual  yield,  or  only  the  assay  value  from  which  losses 
will  have  to  be  deducted. 

While  it  is  manifestly  unfair  to  calculate  costs  on  the  inter- 
rupted operation  of  only  three  months,  I  give  the  following  costs 
for  what  they  are  worth : 

BALAKLALA  CONSOLIDATED  COPPER  COMPANY  —  SUMMARY  OF  MINE 

OPERATIONS 
OCTOBER,  NOVEMBER,  AND  DECEMBER,  1908 

Cost  Per  Ton 

Development    - $1,452.47 

Mining  29,866.14 

Compressor  787.93 

Air  drills    1,199.62 

Mine  tramway    1,807.31 

Timbering 1,620.97 

Power ;      1,560.36 

Shop's  expense 245.64 

General  expenses,  including  taxes  and  insurance  ....         4,250.02 
Carried  forward $42,790.46 


234  THE  COST  OF  MINING 

Brought  forward $42,790.46  $2.284 

Surface  and  road  repairs    118.03  .006 

Repairs  to  buildings    197.31  .010 

Stable  expense 438.10  .023 

Steel  sharpening 666.36  .035 

Special  construction    1,244.00  .066 


Total  cost   $45,454.26  $2.424 

Ore  mined,  18,751  tons. 

SUMMARY  OF  SMELTER  OPERATIONS 

OCTOBER,  11  DAYS            NOVEMBER,  11  DAYS  DECEMBER,  31  DAYS 

Amount        Cost  Per  Ton 
of  Ore 

Converters $1,750.77  .070 

Blast  furnaces 51,095.00  2.035 

Matte  and  slag  casting    4,454.52  1.77 

Repairs  to  plant  buildings 1,444.51  .057 

Repairs  to  ore  bins    2,110.78  .084 

Railroad  —  operation  and  maintenance 2,697.14  .108 

Unloading  custom.ore  .  .  .  -. 1,190.72  .047 

Sampling  mill  for  custom  ore 887.75  .035 

Sampling  mill  for  sulphides 2,253.35  .089 

Lighting,  electric 1,148.75  .045 

Water  supply  and  pumping  plant 424.78  .017 

Assay  office 800.44  .032 

General  expenses,  including  insurance  and  taxes  ....  3,199.48  .128 

Total  expense $73,457.99  $2.924 

Ore  smelted,  25,121  tons    66,961.50  2.665 


Furnace  products  on  hand  —  Total  cost  (see  Balance 

Sheet)    $140,419.49          $5.589 


Operating  tramway 0.304 

Total  cost  per  tori    5.893 

Assuming  that  the  60  Ib.  mentioned  above  represents  recov- 
ered metals,  these  costs  indicate  operating  costs  of  about  10  cents 
per  pound.  To  this  will  have  to  be  added  an  annual  charge 
of  6  per  cent,  on  $1,500,000  for  depreciation  of  plant  expressed 
in  construction,  equal  to  $90,000  a  year.  General  expense, 
including  taxes,  insurance,  and  administration,  will  be  $35,000 
more.  On  an  output  of  250,000  tons  these  items  will  be  50  cents 
per  ton  and  the  total  operating  cost  of  copper  will  approach 
11  cents. 

The  amortization  of  $2,500,000  invested  in  the  property  with 


COPPER  MINES   IN  VARIOUS   OTHER  DISTRICTS         235 

4  per  cent,  interest  at  15  cents  copper  and  11  cents  cost,  equaling 
4  cents  a  pound  profit,  with  an  output  of  15,000,000  Ib.  a  year, 
will  require  five  years  operation,  1,250,000  tons  of  ore,  and 
75,000,000V  Ib.  of  copper.  Whether  the  company  has  this 
amount  in  sight  or  not  is  not  stated. 


CHAPTER  XIII 

THE  COPPER  MINING    BUSINESS   IN   GENERAL 

Division  into  types  —  Disseminated  Ores  —  Cost  of  producing  copper  from 
disseminated  ores  —  Outlook  in  Lake  Superior  —  Outlook  of  new  mines 
in  the  West  —  Quartz  pyrite  ores  in  fissure  veins  —  Cost  of  copper  at 
Butte  —  Anaconda  —  Outlook  for  the  future  —  When  all  ores  must  be 
smelted  —  Variable  character  of  these  deposits  due  to  reconcentration  of 
values  —  Outlook  for  the  production  of  copper  from  cupriferous  pyrite 
masses  —  The  price  of  copper. 

GENERAL  CONSIDERATIONS 

WE  may  divide  copper  mines  into  three  classes,  each  present- 
ing a  different  economical  problem :  (I)  Disseminated  ores  in  which 
concentration  is  the  all-important  thing,  smelting  being  applied 
only  to  a  fraction  of  the  material  mined.  (II)  Quartz  pyrite  ores 
in  fissure  veins  in  which  the  ratio  of  concentration  is  low,  the 
proportion  smelted  considerable,  making  the  costs  usually  high. 
(Ill)  Ores  that  cannot  be  concentrated  and  must  be  smelted  in 
bulk. 

I.   DISSEMINATED  ORES 

The  first  class  contains  the  Lake  Superior  qopper  ores  in  which 
native  copper  is  disseminated,  either  in  porphyry  or  in  con- 
glomerates derived  from  porphyries,  in  the  proportion  of  from 
1  to  4  per  cent.  These  ores  are  concentrated  in  the  mills  (with 
20  per  cent,  loss  in  milling)  to  from  1  to  4  per  cent,  of  their  orig- 
inal volume.  This  is  the  proportion  smelted. 

We  have  in  this  group  also  the  disseminated  porphyry  ore 
of  Bingham,  Utah,  containing  2  per  cent,  copper  in  the  form  of 
chalcocite.  This  ore  concentrates  with  70  per  cent,  recovery 
into  4J  per  cent,  of  its  original  volume.  The  disseminated  ore 
of  Ely,  Nevada,  which  concentrates  into  12J  per  cent.;  that  of 
the  Clifton-Morenci  district  in  Arizona,  which  concentrates  into 
15  per  cent.;  that  of  Nacozari,  Mexico,  which  concentrates  into 
17  per  cent. ;  the  ore  of  the  new  Miami  Copper  Company  at  Globe, 

236 


THE  COPPER  MINING   BUSINESS   IN   GENERAL  237 

Arizona;  and  the  Braden  copper  mines  of  Chili,  may  all  be  in- 
cluded in  this  class. 

These  ores  now  produce  a  third  and  will  soon  yield  one-half 
of  the  copper  of  North  America,  and  they  may  be  described  as 
the  most  important,  most  profitable,  and  most  promising  source 
of  copper. 

On  the  basis  of  the  ton  mined  these  ores  are  far  more  cheaply 
worked  than  any  other  copper  ores.  The  internal  conditions  for 
cheap  mining  are  excellent.  The  orebodies  are  large,  uniform 
and  firm.  There  are  some,  such  as  Utah  Copper,  Nevada  Con- 
solidated, and  others,  which  present  the  great  advantage  of  being 
accessible  to  open-pit  methods  of  mining. 

The  cost  of  concentrating  (including  transportation  to  mills) 
is  determined  largely  by  the  external  factors  of  the  cost  of  water, 
fuel,  transportation,  and  labor.  The  variation  is  between  the 
figures  of  40  cents  in  Lake  Superior  to  $1  in  less  favorable  situ- 
ations. The  internal  factor  of  the  mineralogical  complexion 
of  these  ores  does  not,  to  my  knowledge,  introduce  in  this  class 
any  great  difficulties. 

The  cost  of  smelting,  refining,  and  marketing  this  class  of 
ores  presents  the  same  external  variables  as  that  of  concentra- 
ting. An  internal  factor  of  significance  is  the  effect  of  concen- 
tration on  the  fluxing  qualities  of  the  ore.  In  terms  of  the 
concentrates  smelted  we  have  in  general  the  following  factors:  (1) 
The  cost  and  quantity  of  fuel  and  flux  required  for  reduction; 
(2)  the  richness  of  the  concentrate  which  determines,  a,  the  cost 
of  converting  or  bessemerizing;  6,  the  cost  of  transportation  to 
market;  and  c,  the  cost  of  electrolytic  refining. 

Manifestly  the  cost  per  ton  smelted  is  more  a  question  of  the 
richness  of  the  ore  smelted  than  of  anything  else;  thus  in  Lake 
Superior,  where  the  external  factors  are  extremely  favorable, 
the  cost  of  smelting,  refining,  and  marketing  per  ton  of  70  per 
cent,  concentrates  is  about  $15,  while  the  concentrates  of  Ely, 
Nevada,  carrying  13J  per  cent,  copper  smelted  and  sold  under 
the  most  costly  conditions,  are  estimated  to  cost  only  $10.50  per 
ton. 

Manifestly  also  the  supreme  factor  of  cost  is  the  divisor  which 
represents  the  proportion  smelted.  In  the  case  of  Lake  Superior 
an  ore  producing  only  2  per  cent,  concentrates  divides  its  cost  of 
$15  per  ton  by  50,  so  that,  as  spread  on  the  ore  milled,  the  cost 


238  THE  COST  OF  MINING 

is  only  30  cents  a  ton.  In  the  case  of  Ely  ores  the  $10.50  cost 
can  only  be  divided  by  8  and  the  resultant  cost  on  ore  mined  is 
$1.31. 

The  salient  facts  regarding  the  cost  of  mining  disseminated 
ores  may  be  expressed  in  the  accompanying  table : 

COST  OF  MINING  DISSEMINATED  ORES 

Low  High 

M.  .      {Open  pit $0.50 

g  I  Underground 1.25  $2.50 

Concentrating 0.40  1.00 

Smelting,  refining,  and  marketing 0.15  1.30 


Open  Pit $1.05  $4.80 

Underground . .        1 .80 

At  the  average  price  of  15  cents  for  copper,  these  figures  mean 
that  under  the  most  favorable  conditions  a  Lake  Superior  ore, 
if  it  could  be  mined  from  an  open  pit,  might  meet  expenses  with 
a  yield  of  only  7  Ib.  per  ton.  If  mined  underground  about  12  Ib. 
is  the  minimum;  while  under  the  most  unfavorable  conditions  a 
yield  of  32  Ib.  may  be  required. 

COST  OF  PRODUCING  COPPER  FROM  DISSEMINATED  ORES 

The  average  cost  of  producing  the  entire  output  of  copper 
is  hard  to  determine,  because  a  respectable  fraction  is  sold  by 
obscure  mines  which  may  not  always  be  profitable,  and  whose 
records  are  not  to  be  had.  I  have  taken  the  ground  that  the 
price  must  be  controlled  by  the  leading  and  profitable  producers 
which  sell  the  bulk  of  the  output  of  each  district.  In  order  to 
form  some  idea  of  the  cost  to  such  leaders,  I  have  compiled  the 
following  information,  the  justness  of  which  will  be  evident  to 
any  reader. 

The  Calumet  &  Hecla  Mining  Company  had  produced  up  to 
June,  1908,  approximately  2,040,000,000  Ib.  of  copper,  on  which 
its  earnings  were  approximately  $115,000,000  net.  This  mine 
had  built  up  its  enormous  plant  almost  entirely  out  of  earnings, 
so  that  for  its  forty  years  of  activity  its  real  and  complete  cost 
of  production  must  equal  the  selling  value  of  its  output,  less 
the  profits.  The  actual  price  received  for  Lake  Copper  in  the 
last  forty  years  has  been  almost  exactly  15.3  cents  per  pound. 
Now  the  profit  of  $115,000,000  from  2,040,000,000  Ib.  is  equal  to 


THE  COPPER  MINING   BUSINESS   IN   GENERAL  239 

5.63  cents  per  pound.  Subtract  this  from  15.30  cents,  and  we 
get  9.67  cents  as  the  cost  of  the  entire  product. 

Similarly,  the  Quincy  mine  has  produced  413,000,000  Ib.  at 
a  total  cost  of  $45,500,000,  equal  to  11  cents  a  pound.  The  Cop- 
per Range  mines,  Baltic,  Trimountain,  and  Champion,  had 
produced,  up  to  1907,  209,000,000  Ib.  for  $27,316,000,  equal  to 
13.07  cents  a  pound.  The  Wolverine  had  produced,  up  to  1907, 
87,000,000  Ib.  for  $7,783,000,  equal  to  8.9  cents  a  pound. 

This  entire  group  has  produced  2,740,000,000  Ib.  for  $275,- 
364,000,  equal  to  a  trifle  over  10  cents  a  pound. 

Looking  to  the  future  it  is  plain  that  the  cost  of  copper  from 
the  Lake  Superior  district  and  from  these  same  mines  will  exceed 
this  figure.  In  some  former  article  published  in  the  Engineering 
and  Mining  Journal  on  this  subject,  I  stated  that  the  copper 
from  disseminated,  concentrating  deposits  could  be  produced 
for  9  cents.  I  was  misled  in  making  this  statement  by  taking 
too  narrow  a  view  of  the  situation.  The  Calumet  &  Hecla  in 
its  ten  most  prosperous  years,  from  1897  to  1906,  produced  855,- 
000,000  Ib.  at  about  8J  cents  a  pound.  This  figure,  in  the  light 
of  fuller  consideration,  appears  to  be  quite  1.4  cents  below  the 
average  for  the  life  of  the  mine  to  date;  and  still  more  below  the 
prospective  costs. 

The  situation  is  as  follows:  During  the  ten  fat  years  men- 
tioned above,  the  mine  was  in  bonanza.  The  ore  yielded  quite 
50  Ib.  per  ton.  Nearly  all  the  production  was  from  the  great 
conglomerate  ore  shoot,  which  has  been  quite  exceptional  among 
Lake  Superior  deposits  in  richness.  But,  according  to  testimony 
given  by  Mr.  Alexander  Agassiz,  the  president,  and  by  Mr.  James 
McNaughton,  the  manager  of  the  Calumet  &  Hecla,  in  the 
Osceola  lawsuit,  it  appears  that  by  1908  the  average  yield  of  the 
conglomerate  had  fallen  to  40  Ib.  per  ton,  and  the  yield  is  stead- 
ily diminishing.  The  experience  of  the  Tamarack  was  that  the 
conglomerate  just  below  the  Calumet  &  Hecla  line  yielded  only 
20  Ib.  and  was  unprofitable.  It  appears  probable,  therefore, 
that  the  remaining  ground  on  the  conglomerate  is  likely  to  yield 
not  more  than  a  mean  between  40  Ib.  and  20  Ib.,  or  30  Ib.  per 
ton.  The  testimony  is  that  between  20  and  24  million  tons  of 
conglomerate  will  still  be  produced.  This  means  only  600  to 
700  million  pounds.  It  does  not  seem  probable  that  this  will 
cost  less  than  11  cents  on  the  average.  This  is  about  what  it 


240 


THE    COST   OF    MINING 


costs  on  the   Osceola   lode   where   worked   by  the   same   com- 
pany. 

When  we  remember  that  it  has  cost  the  Quincy  11  cents, 
that  it  is  costing  the  Osceola  Consolidated  12  cents,  the  Mohawk 
over  11  cents,  it  does  not  seem  likely  that  there  is  any  prospect 
of  any  great  output  below  that  figure.  The  Wolverine  is  indeed 
producing  for  less  than  8  cents,  but  its  output  is  so  small  as  to 
have  little  effect.  The  Copper  Range  mines  can  hardly  expect 
to  fall  under  11  cents  for  complete  costs.  Their  product  thus 


FIG.  12. — Pit  at  Bingham,  Utah. 

far  has  cost  over  13  cents,  but  this  includes  the  whole  cost  of 
equipment.  A  deduction  of  2  cents  a  pound  for  the  209,000,000 
Ib.  produced  by  the  Copper  Range  mines  makes  over  $4,000,000, 
which  seems  to  be  all  that  should  be  charged  to  the  future  for 
plant.  It  seems,  therefore,  that  if  the  Copper  Range  can  cover 
all  expenses  for  11  cents,  it  will  do  very  well. 

When  we  consider  that  these  figures  are  for  the  best  mines 
in  the  district,  and  that  the  factor  of  increasing  depth  increases 
both  the  cost  and  the  danger  of  impoverishment,  we  may  con- 


THE  COPPER  MINING   BUSINESS   IN   GENERAL  241 

elude,  I  think  with  safety,  that  there  will  be  no  real  profits  from 
the  Lake  mines  under  11  cents,  and  very  little  under  12  cents. 

COST  OF  MINES  OF  DISSEMINATED  COPPER  ORES  IN  THE  WEST 

This  industry  really  belongs  to  the  future.  While  some 
disseminated  ores  have  been  mined  for  years  at  the  Clifton-Mo- 
renci  district  in  Arizona,  and  at  Nacozari  in  Mexico,  it  is  only 
with  the  launching  of  Utah  Copper,  Boston  Copper,  Nevada 
Consolidated,  Miami  Copper,  and  Ray  Consolidated,  that  mines 
of  this  class  have  become  important.  The  full  effect  of  these 
producers  will  not  be  developed  for  some  years,  but  they  all 
report  great  quantities  of  ore  in  sight  and  enough  operating  has 
been  done  to  throw  some  light  on  the  probable  results.  The 
ore  reasonably  to  be  counted  on  is  reported  somewhat  as  follows  : 

Bingham,  Utah 100,000,000  tons  at  22  -  2,200,000,000  Ib. 

Ely,  Nevada 33,000,000  tons  at  30  =  1,000,000,000  Ib. 

Globe,  Arizona 100,000,000  tons  at  30  -  3,000,000,000  Ib. 

Ray,  Arizona 80,000,000  tons  at  25  -  2,000,000,000  Ib. 

Others    40,000,000  tons  at  30  =  1,200,000,000  Ib. 

Total    353,000,000  tons  at  26  =  9,400,000,000  Ib. 

It  appears  further  that  there  is  still  a  probability  of  sufficient 
development  of  new  ore  to  make  good  the  estimate  of  copper 
production  in  spite  of  any  losses  in  mining.  In  the  case  of  Utah 
Copper,  Boston  Consolidated,  and  Nevada  Consolidated,  a  large 
amount  will  be  mined  with  steam  shovels  in  open  pits,  where 
there  will  be  no  mining  losses.  The  remaining  ore  will  be  sub- 
ject to  underground  losses  that  probably  will  not  average  more 
than  15  per  cent. 

Referring  to  the  analysis  in  the  preceding  chapter  of  the  cost 
of  producing  copper  by  the  Utah  Copper  Company,  it  will  be 
seen  that  an  estimate  is  given  of  cost  on  the  basis  of  an  average 
annual  production  of  75,000,000  Ib.,  or  its  equivalent,  as  follows: 

Operating  costs  8.5  cents 

Depreciation  =  $300,000  a  year  for  new  construction .4  cents 

Total  dividend  cost  8.9  cents 

Add  amortization  $560,000  a  year  8  cents 

Total  selling  cost 9.7  cents 

There  are  not  yet  available  for  Nevada  Consolidated  any 
such  figures  on  costs  as  are  now  afforded  by  Utah  Copper,  but  it 


242  THE  COST  OF  MINING 

is  currently  reported  that  it  is  producing  copper  at  a  cost  of  7.35 
cents.  Probably  the  value  of  gold  and  silver  is  deducted  from 
the  cost.  If  we  figure  in  this  gold  and  silver  as  the  equivalent 
of  copper  we  increase  the  cost  by  about  10  per  cent.,  which  would 
bring  the  actual  cost  up  to  about  8.1  cents  for  operating.  Assum- 
ing that  the  depreciation  and  amortization  charges  will  be  the 
same  as  in  the  case  of  Utah,  we  have  the  following: 

Copper,  silver,  and  gold  in  ore  realizable  equals  the  equiv* 
alent  of  33  Ib.  copper  per  ton. 

Operating  cost  8.1  cents 

Depreciation 4  cents 

Total  dividend  cost 8.5  cents 

Amortization  8  cents 

Total  selling  cost 9.3  cents 

The  remaining  properties  in  the  group  have  no  experience 
that  warrants  making  anything  but  an  engineering  estimate, 
but  we  have  the  estimates  of  Mr.  J.  Parke  Channing  for  Miami, 
and  Mr.  D.  C.  Jackling  for  the  Ray  Consolidated,  that  the  copper 
at  those  properties  can  be  produced  at  9  cents  a  pound.  If  these 
estimates  are  upon  the  same  basis  of  calculation  as  those  given 
in  the  annual  statements  I  shall  have  to  translate  them  into  my 
own  language  as  follows : 

Operating  cost 9.0  cents 

Depreciation  cost 4  cents 

Total  dividend  cost  9.4  cents 

Add  amortization 8  cents 

Total  selling  cost 10.2  cents 

The  whole  matter  resolves  itself  into  the  following  calculation. 
Dividends  will  be  paid  from  these  properties  on  the  basis  of  cost  for 

Utah  copper 1,750,000,000  Ib.  at  8.9  cents 

Nevada  consolidated 780,000,000  Ib.  at  8.5  cents 

Miami  and  Ray  l ' 1,300,000,000  Ib.  at  9.4  cents 

Average  for 3,830,000,000  Ib.  at  9.0  cents 

1 1  doubt  if  the  Ray  district  can  produce  copper  so  cheaply.  I  prefer 
an  estimate  of  dividend  cost  of  at  least  11  cents  for  that  district.  The  fact 
of  the  matter  is  that  the  new  Porphyry  mines  cannot  produce  copper  at 
notably  low  costs  except  where  they  may  be  worked  with  steam  shovels. 
How  far  this  method  can  be  extended  among  this  class  of  deposits  is  a 
doubtful  but  highly  interesting  question. 


THE  COPPER  MINING   BUSINESS   IN   GENERAL  243 

•The  minimum  selling  price  justified  is  obtained  by  adding  an 
estimated  amortization  of  capital  of  T8ff  of  a  cent  per  pound, 
making  the  total  real  cost  9.8  cents  per  pound,  say  for  round 
numbers,  10  cents  for  practically  2,000,000  tons  of  refined  cop- 
per. 

II.   QUARTZ-PYRITES  WITH  Low  CONCENTRATION 

Of  quartz-pyrite  ores  I  have  given  the  conspicuous  examples 
of  Butte  and  of  the  Wallaroo  and  Moonta.  There  is  substantial 
agreement  on  the  following  points: 

(1)  A  high  mining  cost  owing  to,  a,  high  development  cost 
due  to  searching  for  ore  shoots  through  much  barren  vein  material; 
b,  considerable  selection  of  ore  in  the  process  of  mining;  c,  soft 
ground  requiring  elaborate  timbering  and  filling. 

(2)  A  high  concentrating  cost  due  in  part  to  the  use  of  hand 
sorting,  but  particularly  to  the  careful  milling  methods  required 
to  prevent  undue  losses. 

(3)  Smelting  costs  are  high  because,  first,  a  low  degree  of 
concentration  gives  a  large  proportion  to  smelt  (from  25  to  50 
per  cent.) ;  second,  because  the  siliceous  and  aluminous  character 
of  the  gangue  renders  smelting  rather  difficult;  third,  because 
the  ore  as  mined  is  necessarily  of  fairly  high  grade. 

The  external  conditions  in  Butte  are  somewhat  less  favorable 
than  at  the  Wallaroo  and  Moonta,  but  in  neither  case  are  the 
high  costs  due  to  them.  I  believe  that  high  costs  are  inherent 
to  quartz-pyrite  ores  in  fissure  veins. 

Australia  Montana 

Mining $4.68  $3.78 

Milling 1.00 

Smelting,  refining,  and  marketing 2  37  4.62 

General  expenses 0.58 


$8.63  $8.40 

Applying  to  these  costs  the  average  price  of  15  cents  per 
pound  copper,  it  is  evident  that  such  ores  must  yield  about 
60  Ib.  copper  or  its  equivalent  in  order  to  pay  expenses.  With 
the  impoverishment  of  the  ores  with  increasing  depth,  costs 
have  increased,  until  to-day  the  average  Butte  copper  must 
cost  more  than  11  cents  and  perhaps  12  cents.  At  the  Wal- 
laroo and  Moonta  copper  has  averaged  in  cost  almost  exactly 


244  THE  COST  OF  MINING 

10  cents,  and  lately  as  high  as  15  cents.  The  last  figure,  how- 
ever, was  an  incident  of  the  boom  of  1906,  and  must  be  consid- 
ered abnormal. 

Other  mines  of  this  class  are  the  Old  Dominion  and  others  on 
the  great  fault  fissure  of  Globe,  Arizona,  and  in  part,  at  least, 
those  of  Cananea,  Mexico.  Whatever  geological  grouping  may 
be  appropriate,  the  economic  results  are  similar  to  the  illustra- 
tions given,  and  bear  out  emphatically  the  generalization  that 
cupriferous  pyrites  with  a  highly  siliceous  and  aluminous  gangue, 
occurring  in  shoots  in  fissure  veins,  are  essentially  high-cost 
ores  at  every  stage  of  the  process. 

COST  OF  PRODUCING  COPPER  AT  BUTTE 

Let  us  examine  critically  the  record  of  the  Anaconda  Copper 
Mining  Company  to  get  some  light  on  the  past  and  future  cost 
of  metal  at  Butte.  At  the  beginning  it  is  well  to  explain  that 
the  record  is  only  a  broken  one,  there  being  no  reports  showing 
the  exact  condition  of  the  company  for  a  period  of  seven  years, 
from  1898  to  1905.  During  this  dark  age  there  were  indeed 
some  scraps  of  information  given  out,  but  the  output,  even,  has 
not  been  stated  with  authority.  We  have,  however,  enough 
information  to  enable  one  to  make  some  fairly  accurate  deduc- 
tions as  to  the  past  and  future  cost  of  production. 

The  present  company  was  reorganized  and  began  business 
July  1,  1895.  It  had  at  that  time  little  or  no  surplus  in  its  treas- 
ury. Up  to  April,  1908,  it  had  paid  $39,500,000  in  dividends, 
and  had  accumulated  a  surplus  of  $6,261,000.  It  seems  fair- to 
conclude  that  in  12  J  years  the  earnings  were  $45,500,000. 

This  had  been  obtained  from  an  output  which,  as  just 
mentioned,  is  not  stated  with  authority  but  is  approximately 
1,228,000,000  Ib.  copper,  45,365,000  oz.  silver,  and  196,000  oz. 
gold. 

The  average  price  of  metals  for  the  period  was  15  cents  for 
copper,  57  cents  for  silver,  and  $20  for  gold.  It  is  not  strictly 
accurate  to  apply  these  prices  to  the  entire  output,  but  as 
the  output  has  been  fairly  uniform  for  the  period  there  is  no 
likelihood  of  inaccuracy  sufficient  to  throw  our  calculation  far 
astray. 

Let  us  now  convert  the  silver  and  gold  into  their  equivalent 
in  copper  at  15  cents  a  pound.  We  find  that 


THE  COPPER  MINING   BUSINESS    IN  GENERAL  245 

45,365,000  ounces  silver  at  57  cents  equals 172,387,000  Ib. 

196,000  ounces  gold  at  $20  equals 25,968,000  Ib. 

Add  the  copper  metal 1,228,000,000  Ib. 

We  get  the  total  copper  equivalent 1,425,455,000  Ib. 

By  dividing  the  profit  of  $45,500,000  by  $1,425,000,000  we 
get  the  average  profit  per  pound,  which  is  3.19  cents.  Subtract 
this  from  the  average  price  of  15  cents,  and  we  have  the  cost, 
which  equals  11.81  cents  per  pound.  Of  course  if  the  value  of 
gold  and  silver  were  deducted  from  the  cost  and  the  remaining, 
sum  only  charged  against  the  copper,  the  latter  would  be  sub- 
stantially cheaper,  but  that  does  not  seem  logical. 

Let  us  now  leave  the  sphere  of  approximations  and  examine 
those  parts  of  the  record  where  exact  figures  are  given.  In  the 
two  years  ending  June  30,  1897,  we  find  that  the  total  output 
was  as  follows : 

Value 

Tons  dry  ore 2,681,623 

Pounds  refined  copper 239,400,895  $25,041,240 

Ounces  silver    11,249,792  7,387,965 

Ounces  gold    38,680  798,000 

$33,227,205 

The  copper  equivalent  is  317,660,000  Ib.,  this  being  equal  to  118.5 
Ib.  per  dry  ton. 

The  total  expenses  for  the  period  were  $24,855,214.29  and 
the  cost  per  pound  for  operating  was  therefore  7.825  cents.  To 
this  may  be  added  a  total  increase  of  capital  accounts  of  $967,- 
641.70.  If  we  write  this  all  off  to  operating  the  cost  is  increased 
by  0.304  cents  and  the  total  becomes  8.129  cents  per  pound. 

The  total  cost  per  ton  was  $9.23. 

After  making  the  reports  of  which  the  above  is  a  summary, 
the  company  issued  no  reports  till  1905.  We  have  satisfactory 
reports  for  the  years  1905,  1906,  and  1907.  This  period  represents 
the  progress  of  the  company  for  an  average  of  nine  years.  For 
the  three  final  years  the  record  was: 

Tons  produced 4,075,725 

Copper  metal,  Ib 253,363,226 

Silver,  oz 8,098,139 

Gold,  oz 43,420 

Equivalent  in  copper 286,136,000 

Copper  equivalent  per  ton,  Ib 70.02 


246  THE  COST  OF  MINING 

Total  receipts $50,089,139 

Dividends  paid $16,650,000 

Net  diminution  of  surplus    769,000 

Actual  profits 15,881,000 

Net  value  per  Ib.  copper 17.514  cents 

Net  profit  per  Ib.  copper 5.553  cents 

Net  cost  per  Ib.  copper 11.961  cents 

Total  cost  per  ton    >  $8.394 

The  meaning  of  these  figures  is  so  obvious  as  scarcely /to 
require  comment.  We  find  the  mines  producing  practically  the 
same  tonnage  as  nine  years  before.  The  cost  per  ton  has  dimin- 
ished $1.24.  The  yield  of  ore  has  diminished  from  118.5  Ib.  to 
70.2  Ib.  per  ton,  in  spite  of  the  fact  that  the  later  production  has 
been  helped  out  a  little  by  the  re-working  of  slags  from  the  earlier 
period.  The  diminution  in  the  grade  of  the  ore  has  far  out- 
weighed the  diminution  of  cost  per  ton,  so  that  the  cost  of  copper 
has  risen  from  8.129  cents  to  11.961  cents,  a  net  increase  of  3.832 
cents  per  pound.  It  is  fair  to  remark  that  the  costs  in  the  latter 
period  were  adversely  affected  by  the  shortening  of  hours  of 
labor,  increased  wages,  and  the  general  inflation  of  prices  of  a 
boom  period;  but  it  must  be  noted  that  these  adverse  conditions 
did  not  become  acute  until  the  middle  of  1906,  and  in  any  event 
cannot  go  far  in  accounting  for  the  great  cost  increase. 

I  am  not  fully  qualified  to  express  an  opinion  as  to  how  far 
the  experience  of  the  Anaconda  represents  that  of  other  Butte 
mines,  but  all  indications  are  that  it  represents  them  pretty 
accurately.  We  find  that  at  the  earlier  period  the  Anaconda 
was  producing  better  ores  than  any  other  mines  have  recently 
produced.  Some  rich  ore  has  been  found  in  the  lower  levels, 
below  2000  ft.  in  depth,  but  not  enough  to  arrest  the  decline  in 
metal  contents  for  the  total  output.  There  is,  of  course,  no  rea- 
son to  doubt  that  by  careful  selection  of  ores  the  decline  may  be 
temporarily  overcome,  but  this  can  only  be  by  a  proportionately 
rapid  depletion  of  reserves. 

It  seems  perfectly  certain  that  the  selling  cost  of  Butte  copper 
is  fully  12  cents  a  pound  and  is  constantly  rising.  The  rise  is  not 
likely  to  be  stopped  by  anything  short  of  a  diminution  of  output, 
which  would  be  caused  by  the  extensive  selection  of  ores  in  order 
to  bring  them  up  to  a  higher  grade.  A  good  deal  can  undoubtedly 
be  done  to  hold  costs  down.  Whenever  it  is  imperative  wages 


THE  COPPER  MINING   BUSINESS   IN   GENERAL  247 

can  be  cut.  A  diminished  output  at  profitable  cost  is  better 
than  a  large  output  without  profit.  The  Anaconda  mines  are 
undoubtedly  developed  and  worked  somewhat  in  advance  of  the 
average  of  the  district,  because  they  are  the  oldest.  How  far  in 
advance  they  are  cannot  be  stated,  but  the  logic  of  events  to 
date  is  that  in  ten  years  more,  if  tonnage  is  maintained,  this 
property  will  be  no  longer  profitable. 

III.   WHEN  ALL  ORE  MUST  BE  SMELTED 

I  have  given  as  examples  of  the  third  class  of  copper  mines; 
i.e.,  that  in  which  all  the  ore  must  be  smelted,  Bisbee,  Arizona, 
Tennessee  Copper,  Utah  Consolidated,  Granby  Consolidated, 
and  Mount  Lyell.  To  this  list  might  be  aded  the  Rio  Tinto 
pyrite  mines  of  Spain  and  Portugal,  the  mines  of  Shasta  County, 
California,  United  Verde  in  Arizona,  Cerro  de  Pasco  in  Peru, 
and  others  of  less  importance. 

Economically  we  may  make  the  following  distinctions  in 
this  class: 

(1)  Cupriferous  pyrites  in  an  advanced  state  of  alteration 
and  reconcentration,  so  that  only  a  small  part  of  the  original 
mass  can  be  mined.     In  this  case  mining  costs  as  well  as  smelt- 
ing   costs    are    inevitably    high.      Bisbee,    Arizona,    is    a    good 
example. 

(2)  Cupriferous  pyrites  in  their  original  state  or  moderately 
enriched.     In  this  case  there  is  usually  presented  a  large  mass  of 
homogeneous   ore   easily   mined   and   easily  treated.     Tennessee 
Copper,  Utah  Consolidated,  and  Mount  Lyell  are  examples.     At 
these  properties  the  cost  per  ton  is  from  $4.20  to  $6. 

(3)  Disseminated,  self-fluxing  ores  not  very  pyritic.     Granby 
Consolidated  is  an  example. 

Speaking  generally,  it  must  be  admitted  that  mines  of  class 
III  produce  a  goodly  proportion  of  the  world's  copper.  The  list 
of  big  producers  includes  the  Rio  Tinto,  the  Copper  Queen,  Cal- 
umet &  Arizona,  United  Verde,  and  many  other  mines  not  so 
big,  but  very  profitable.  Rio  Tinto  seems  to  produce  the  cheap- 
est copper  in  the  world,  but  I  believe  this  is  due  to  the  fact 
that  the  sulphur  is  also  utilized  to  an  important  extent.  Leav- 
ing out  this  case,  in  which  copper  only  costs  5  cents  per  pound, 
it  does  not  seem  probable  that  much  copper  from  these  ores  is 
produced  at  less  than  10  cents  per  pound. 


248 


THE  COST  OF  MINING 


Taking  a  number  of  mines  of  this  class  of  which  we  have 
records  for  a  considerable  period,  we  find  the  following: 


Pounds  of 
Copper 
Equivalent 

APPROXIMATE  COSTS 

Dividend 

Cost 

Selling 
Cost 

308,000,000 
166,000,000 
42,000,000 
115,000,000 
70,000,000 
100,000,000 

40,000,000 

Copper  Queen,  5  years          

9.0 
8.9 
17.3 
7.35 
11. 
8.35 
11. 
12. 

10.0  cents 
9.4  cents 
20.0  cents 
8.06  cents 
17. 
9. 
15. 
14. 

Calumet  &  Arizona,  5  years  
Superior  &  Pittsburgh,  3  years  
Utah  Consolidated   6  yea.rs 

Granby  Consolidated,  3  years    

Mount  Lyell   4  years             

First  National,  3  months    

Tennessee  Copper,  6  years    

Calculating  out  a  rough  average  from  these  figures  it  appears 
that  this  group  of  mines  has  averaged  a  dividend  cost  of  9.4 
cents  and  a  selling  cost  of  10.8  cents  for  the  period  mentioned. 

It  is  very  well  worth  remarking  that  where  the  original  pyrite 
masses  are  highly  altered  and  the  payable  ores  concentrated 
into  small  portions  of  the  original  orebody,  rich  ores  have  often 
been  developed  out  of  material  which  was  originally  too  low  grade 
to  pay.  This  is  the  case  of  Bisbee,  Arizona,  and  in  Shasta  County, 
California,  and  probably  at  Cerro  de  Pasco.  Such  bonanza  ore- 
bodies  are  sure  to  be  variable  in  their  output  and  may  come  to  a 
sudden  end.  They  are  exasperating  to  the  mining  engineer 
who  tries  to  calculate  their  possibilities,  and  dangerous  to  the 
investor.  It  is  seldom  possible  to  put  much  ore  in  sight,  or  to 
count  with  assurance  on  a  long  life  for  the  property.  Neverthe- 
less they  are  often  exceedingly  profitable. 

Where  certain  portions  of  the  orebodies  are  enriched,  but  the 
original  masses  are  still  payable,  the  mines  may  exhibit  painful 
variations  in  cost  and  profits,  but  still  remain  prospectively  val- 
uable for  a  long  time  ahead.  Such  cases  are  the  Utah  Consoli- 
dated, which  has  had  a  bad  year,  the  Mount  Lyell,  and  probably 
the  United  Verde. 

Where  the  pyrite  masses  are  in  their  original  condition  they 
are  apt  to  be  uniform  and  reliable  producers.  Undoubtedly  the 
Rio  Tinto  mine  in  Spain  has  a  longer  assured  life  and  more  stable 


THE  COPPER  MINING   BUSINESS   IN  GENERAL  249 

operating  conditions  than  any  other  copper  mine  in  the  world. 
The  Tennessee  Copper  property  is  apparently  the  only  mine  of 
this  class  in  America,  but  probably  others  will  be  developed. 

THE  PRICE  OF  COPPER 

I  feel  very  confident  that  the  analysis  of  costs  demonstrates 
as  valid  the  following  conclusions : 

1.  No    copper    can   be   produced   in"  North   America   under 
present  economic  conditions  at  a  profit  for  less  than  10  cents  a 
pound. 

2.  At  11  cents  a  pound  only  half  the  present  output  can  be 
produced. 

3.  At  12  cents  many  of  the  largest  producers  would  only  be 
getting  a  new  dollar  for  an  old  one. 

4.  At  15  cents  the  business  as  a  whole  is  prosperous  and  profit- 
able only  to  an  entirely  legitimate  degree. 

5.  As  long  as  the  demand  increases  as  it  has  increased  stead- 
ily for  the  past  quarter  century,  it  is  safe  to  count  for  the  next 
ten  years  on  an  average  price  of  15i  cents,  which  has  been  the 
approximate  average  for  the  last  ten  years. 


CHAPTER  XIV 

LEAD 

Lead  mining  in  general  —  Division  into  three  economic  types  —  Dissemi- 
nated ores  —  Fissure  veins  —  Ores  resulting  from  concentration  of  mixed 
sulphides  —  Production  of  lead  by  states  —  Southeast  Missouri  — • 
Occurrence  of  ores  —  Exploration  —  Mining  —  Milling  —  Smelting  — 
Calculations  of  aggregate  capital  required  and  results  —  Cost  of  lead 
from  this  district. 

LEAD  MINING 

WHILE  a  geological  description  of  lead  deposits  would  be 
rather  tedious  and  difficult  to  make,  a  classification  of  lead  ores 
from  an  economic  standpoint  is  easy.  As  in  the  case  of  copper 
they  fall  naturally  into  three  groups. 

1.  Disseminated  sulphide  ores  that  can  be  concentrated  in  a 
high  ratio,  i.e.,  where  far  the  greater  part  of  the  material  mined 
can  be  discarded  mechanically  as  waste,  leaving  only  3  to  10  per 
cent,  to  be  smelted. 

2.  Fissure  vein  deposits,  almost  always  carrying  an  impor- 
tant amount  of  silver,  and  often  gold  and  copper.     Such  ores 
concentrate  in  a  moderate  ratio.     From  10  to  35  per  cent,  must 
be  smelted. 

3.  High-grade   bunches  of    carbonates  or  sulphides  already 
concentrated  by  nature  so  that  the  ore  must  be  smelted  as  mined, 
the  only  rejection  of  waste  being  by  hand  sorting. 

Without  going  much  into  detail  it  will  be  interesting  to  pur- 
sue the  characteristics  of  these  ores  a  little  further. 

1.  In  the  United  States  practically  the  only  disseminated 
ores  are  those  of  the  Mississippi  Valley  region,  principally  in 
Missouri.  They  have  been  deposited  by  waters  circulated  from 
the  surface  downward,  and  depositing  lead  ores  in  the  beds  of 
limestone  most  favorable,  through  their  chemical  or  mechanical 
structure,  for  the  reception  of  such  ingredients.  These  deposits 
are  invariably  sharply  limited  in  their  extension  downward. 

250 


LEAD  251 

They  are  confined  to  certain  beds  that  the  geologist  can  soon 
recognize.  The  horizontal  extent  may  be  very  great,  sufficient 
to  give  these  deposits  great  importance  and  a  long  prospective 
life.  The  southeast  Missouri  district  is  by  a  good  margin  the 
most  productive  in  the  world.  Here  the  mining  conditions  are 
closely  parallel  to  the  copper  districts  of  Lake  Superior  and  to 
the  newly  developed  disseminated  copper  ores  of  the  West. 
This  holds  good  as  to  costs.  As  in  the  case  of  copper  ores  of 
this  class,  the  total  cost  of  production  per  ton  of  ore  is  between 
$2  and  $3.  The  lead  ores  of  this  class  are  about  three  times  as 
rich  as  the  copper  ores,  hence  the  cost  of  lead  is  only  one-third 
the  cost  of  the  copper;  a  fact  that,  as  a  corollary,  holds  good  with 
regard  to  the  selling  price  of  the  metal. 

2.  The  fissure  vein  deposits  are  of  much  greater  geological 
complexity  and  interest.  The  Coeur  d'Alene  mines  belong  to 
this  class.  They  are  for  the  most  part  original  deposits  caused 
by  hot  waters  ascending  along  fissures  from  great  depths  and 
from  an  unknown  source.  There  is  nothing  simple  about  the 
process  either  geologically  or  chemically.  The  fissures  were 
not  simply  open  cracks  in  the  rock,  they  were  more  apt  to 
be  crushed  zones  where  the  circulation  of  water  was  often 
brought  to  a  stop  by  the  infiltration  of  minerals  and  again 
started  by  renewed  fissuring.  There  were  thus  several  distinct 
periods  of  mineralization.  Sometimes  the  successive  mineral- 
izations were  of  the  same  character,  sometimes  of  quite  diverse 
characters. 

In  the  case  of  the  principal  deposits  of  the  Coeur  d'Alenes 
the  lead  ores  were  deposited  at  the  expense  of,  and  replacing, 
certain  iron  carbonates  that  had  been  deposited  earlier.  The 
iron  carbonates  had  often  replaced  large  quantities  of  the  orig- 
inal quartzite  rock  in  the  fissure  zone.  There  had  been  a  still 
earlier  mineralization  of  quartz  and  iron  pyrites  along  still  earlier 
fissures.  After  the  lead  had  been  deposited  there  was  a  recur- 
rence of  deposition  of  the  iron  carbonates  which  attacked  some 
of  the  lead  sulphides. 

All  these  complicated  processes  were  of  deep-seated  origin. 
After  the  real  mineralization  had  all  ceased  the  orebodies  were 
exposed  to  the  effects  of  the  circulation  of  surface  waters.  As 
the  surface  was  slowly  eroded  away  the  air-carrying  waters 
from  the  surface  reached  gradually  deeper  and  deeper  into 


252  THE  COST   OF   MINING 

the  original  deposits,  attacking  and  rearranging  the  minerals, 
enriching  some  parts  of  the  orebodies  and  impoverishing  other 
parts. 

In  the  Coeur  d'Alene  mines,  the  effect  of  the  last  process  upon 
the  value  of  the  ores  was  not  very  great.  The  oxidation  did 
not  affect  the  veins  more  than  a  few  hundred  feet  down  from 
the  outcrops.  The  far  greater  portion  of  these  deposits  is  orig- 
inal, and  the  mineralization  promises  to  extend  far  downward. 
In  other  words,  the  surface  action  has  nothing  to  do  with  the 
depth  limit  of  profitable  mining.  That  limit  is  quite  unknown. 
Wherever  the  end  of  an  orebody  has  been  found  the  geological 
reason  for  it  has  either  been  that  the  fissure  entered  a  different 
and  less  favorable  rock  formation,  or  else  the  reason  for  termina- 
tion is  obscure.  Certain  formations  of  quartzite  are  now  recog- 
nized as  being  far  more  favorable  for  the  deposition  of  lead,  ores 
than  others.  With  this  sole  limitation  the  Coeur  d'Alene  veins 
promise  to  be  productive  to  very  great  depths. 

Other  great  lead-bearing  fissures  have  a  somewhat  different 
character.  The  great  Broken  Hill  lode  in  Australia,  which  has 
produced  more  than  $325,000,000  in  gross  value  of  lead  and 
silver,  from  which  over  $60,000,000  has  been  paid  in  dividends, 
is  mineralogically  as  much  of  a  zinc  deposit  as  a  lead  deposit, 
though  the  proportion  of  silver  is  nearly  the  same  as  in  the  Coeur 
d'Alenes.  At  Broken  Hill  the  effect  of  surface  waters  in  re- 
arranging the  minerals  was  of  capital  importance.  Although  the 
original  ores  have  been  proved  to  be  payable,  the  metallurgical 
difficulties  encountered  upon  passing  from  the  oxidized  zone 
into  the  unaltered  sulphides  were  so  serious  as  to  bring  the  devel- 
opment of  the  mines  for  a  time  almost  to  a  standstill.  A  brief 
further  description  may  be  interesting. 

The  Broken  Hill  lode  is  one  of  the  greatest  mineral  deposits 
of  any  kind  in  the  world.  It  is  certainly  the  greatest  of  its  class. 
It  is  some  2^  miles  in  length  and  contains  ore  shoots  as  much  as 
300  ft.  thick  of  massive  ore  averaging  some  35  per  cent,  in  lead 
and  zinc  sulphides.  The  geological  relations  of  the  mass  are 
somewhat  obscure.  At  one  time  it  was  thought  to  be  conclu- 
sively proved  that  it  was  a  "saddle  reef/'  i.e.,  a  bed  folded  back 
upon  itself  so  as  to  form  a  deep  trough,  approximately  len- 
ticular in  cross-section  and  plunging  to  the  south.  I  believe 
doubt  has  been  thrown  on  this  explanation,  which  seems  a  little 


LEAD  253 

improbable.  At  any  rate  it  is  a  huge,  highly  mineralized  mass, 
acting  in  all  essential  respects  like  a  fissure  vein,  in  a  region  where 
the  rocks  are  highly  metamorphosed  and  compressed. 

The  original  minerals  seem  to  be  in  the  proportion  of  lead 
sulphides,  about  15  per  cent.,  zinc  sulphides  about  20  per  cent., 
with  a  gangue  of  quartz,  calcite,  garnet,  and  rhodonite.  The 
metallic  assays  are  lead  and  zinc,  each  about  13  per  cent.,  and 
silver  5  to  10  oz.  per  ton.  In  the  lower  parts  of  the  mine  the  ore 
forms  a  hard  compact  mass,  containing  no  waste,  in  which  the 
valuable  minerals  are  closely  knit  together  with  the  gangue, 
making  the  concentration  and  separation  of  the  metals  difficult, 
expensive,  and  unsatisfactory.  But  the  surface  waters,  to  a 
depth  of  from  250  to  400  ft.,  had  removed  the  zinc  and  left  a 
bonanza  orebody  containing  33  per  cent,  lead  and  20  to  30  oz. 
silver;  an  ore  of  easy  metallurgical  treatment  accessible  to  min- 
ing in  an  open  pit.  At  the  surface,  therefore,  the  realization  of 
the  values  presented  no  difficulties  even  in  the  Australian  desert; 
but  when  it  suddenly  became  necessary  to  separate  a  lessened 
percentage  of  lead  from  an  obstinate  accompaniment  of  zinc  (for 
the  two  metals  cannot  be  smelted  together),  facing  at  the  same 
time  a  loss  of  half  the  silver,  in  a  region  where  water  was  scarce 
and  everything  expensive  it  required  a  good  part  of  the  money 
earned  from  the  surface  bonanza  to  solve  the  problem.  It 
required  nothing  short  of  discarding  the  old  smelting  plants 
altogether  and  beginning  anew;  worse  than  that,  experimenting 
with  new  processes.  The  outcome  has  been  that  the  original  ores 
have  proved  to  be  payable,  but  to  a  diminished  degree.  Lead 
can  no  longer  be  produced  so  cheaply,  while  the  great  masses 
of  zinc  ore,  formerly  discarded,  have  become  valuable  and  a 
formidable  factor  in  the  zinc  market.  Under  no  circumstances, 
however,  can  the  original  ores  become  anything  like  so  valuable 
as  the  altered  surface  ores  (except,  indeed,  through  their  much 
greater  volume) . 

Lead  ores  from  such  fissure  veins  as  the  above  bear  a  close 
economic  as  well  as  natural  resemblance  to  the  copper  mines 
on  fissure  veins.  It  will  be  noted  that  the  costs  in  the  Cceur 
d'Alenes  and  at  Broken  Hill,  per  ton,  are  not  far  from  those  of 
the  copper  mines  of  Butte,  of  Wallaroo,  and  Moonta,  and  of  the 
Old  Dominion  at  Globe,  Arizona.  The  total  cost  for  the  whole 
process  is  from  $6  to  $10  per  ton.  As  noted  in  the  case  of 


254  THE  COST  OF  MINING 

disseminated  ores,  the  lead  is  about  three  times  as  abundant  as 
copper,  justifying  prices  inversely  proportional. 

3.  The  third  class  of  lead  ores,  simply  smelting  ores,  are 
nearly  always  of  an  origin  similar  to  the  surface  ores,  just 
described,  of  Broken  Hill.  They  are  usually  the  result  of  the 
reconcentration  of  mixed  sulphides  of  iron,  zinc,  lead,  and  cop- 
per. It  very  often  happens  that  the  original  ores  are  quite 
unpayable,  owing  either  to  their  low  grade,  or  to  the  fact  that 
their  volume  is  insufficient  to  warrant  the  expensive  installa- 
tions of  plant  necessary  to  work  them.  Lead  ores  of  this  kind 
usually  form  an  insignificant  fraction  of  the  ore  deposits  from 
which  they  are  derived,  but  often  they  are  of  high  grade  both  in 
lead  and  silver,  are  near  the  surface,  and  can  be  mined  profitably 
even  in  small  quantities.  For  this  reason  a  considerable  amount 
of  lead  and  silver  is  derived  from  a  multitude  of  small  shipments 
of  this  kind  of  ore,  from  hundreds  of  different  places.  In  some 
few  cases,  such  as  Leadville,  Colorado;  Tintic,  Utah,  and  Park 
City,  Utah,  such  ores  have  been  important  sources  of  lead.  In 
those  camps  the  rich  lead  ores  have  been  the  principal  resource 
of  some  of  the  mines.  A  certain  amount  of  concentrating  ore  is 
obtained  with  the  high-grade  ore,  but  in  each  case,  if  the  high- 
grade  ore  were  absent,  the  lower  grade  ore  would  not  be  payable. 
Other  districts  producing  this  type  of  ore  are  Eureka  and  Pioche, 
Nevada;  Aspen  and  Creede,  Colorado,  and  Santa  Eulalia  in 
Mexico. 

I  shall  give  no  very  clean-cut  examples  of  the  cost  of  mining 
these  ores.  Those  of  Park  City  will  give  a  general  idea.  The 
cost  per  ton  in  general  for  this  class  is  high,  certainly  not  less 
than  $20  per  ton  for  mining  and  smelting.  In  Park  City  the 
cost  is  between  $10  and  $15  for  mining  alone,  to  which  must  be 
added  for  freight,  smelting,  refining,  and  losses  from  $20  to  $25  a 
ton  more,  making  a  total  of  $30  to  $40  a  ton. 

Ores  of  this  class  bear  a  close  parallel  in  manner  of  occurrence, 
methods  of  exploration,  and  high  costs  to  the  similarly  derived 
copper  ores  of  Bisbee,  Arizona. 


LEAD 

PRODUCTION  OF  LEAD  BY  STATES 


255 


State 

1907 

1908 

Arizona    

2,200 

1  867 

California                                         

850 

490 

Colorado 

47,332 

26707 

Idaho 

111  697 

98394 

Kansas     .                                

1,800 

2,400 

Missouri                                                         

123,613 

125  216 

Montana 

2005 

2  309 

Nevada    

3,400 

3,676 

New  Mexico                                                      

1,900 

611 

Oklahoma 

400 

1  000 

Utah  

54,738 

43,995 

Wisconsin                                          

3,500 

3486 

Other  states 

1,204 

600 

Undistributed  

2,026 

Zinc  smelters  .            .        

1,320 

1  290 

Total    

355,959 

314,067 

The  above  table  will  show  at  a  glance  the  sources  of  lead 
supply  in  the  United  States  and  their  comparative  importance. 
I  propose  in  the  following  pages  to  give  an  idea  of  the  state  of 
the  business  in  Missouri,  Idaho,  and  Utah.  These  three  states 
produce  more  than  80  per  cent,  of  the  total  for  this  country.  A 
chapter  is  added  by  Mr.  W.  R.  Ingalls  (The  Mineral  Industry, 
1908)  on  Silver  Lead  Smelting  in  the  United  States,  to  show  not 
only  the  relations  of  the  Western  mines  to  the  custom  smelters 
of  the  country,  but  also  the  business  results  of  the  American 
Smelting  and  Refining  Company,  by  far  the  largest  factor  in  the 
smelting,  refining,  and  marketing  of  lead  and  precious  metals  in 
North  America. 

Missouri  is  first  in  the  list  of  states  in  the  production  of  lead 
ores,  and  first  in  that  of  zinc  ore.  The  mining  is  confined  to  two 
districts,  the  southeast  and  the  southwest.  The  southeast  dis- 
trict produces  ores  from  which,  in  round  numbers,  100,000  tons 
of  pig  lead  are  smelted  yearly ;  from  the  ores  of  the  southwest  — 
or  Joplin  —  field  the  product  is  25,000  tons  of  lead  and  140,000 
tons  of  spelter. 

In  both  fields  the  external  conditions  are  favorable.  Mining 
is  conducted  in  the  midst  of  the  great  agricultural  regions  of  the 


256  THE  COST  OF   MINING 

Mississippi  Valley,  where  the  cost  of  living  is  low,  labor  abundant, 
fuel  and  transportation  cheap,  and  markets  close  at  hand.  The 
internal  factors  also  are  favorable  to  low  costs.  The  depths 
reached  are  not  great,  the  orebodies  are  fairly  large.  In  south- 
east Missouri  the  orebodies  are  persistent,  though  somewhat 
irregular,  while  those  of  the  Joplin  field  are  not  only  irregular, 
but  non-persistent.  In  both  districts,  however,  exploration  by 
drilling  provides  against  underground  perplexities.  In  both 
fields  also,  the  ores  are  favorable  for  water  concentration. 

In  the  southeast  district  there  is,  unfortunately,  little  to  be 
found  in  the  way  of  reports  of  mining  companies.  The  follow- 
ing notes  are  from  my  own  observation,  and  while  I  cannot  vouch 
for  the  accuracy  of  the  figures  as  representing  any  particular 
property,  I  believe  that  they  may  be  taken  as  fairly  representing 
the  district  as  a  whole. 

SOUTHEAST  MISSOURI  LEAD 

Mining  in  southeast  Missouri  is  based  on  orebodies  that  carry 
an  average  of  about  5  per  cent,  in  metallic  lead,  or  a  little  more. 
The  ore  is  called  disseminated  from  the. fact  that  the  galena  is 
often  sprinkled  through  the  limestone,  although  usually  most 
of  the  lead  is  confined  to  rich  streaks.  The  ore  concentrates 
well  and  can  be  turned  into  a  65  or  70  per  cent,  product,  with  a 
saving  of  80  per  cent.  Commercially  speaking,  therefore,  the 
ore  yields  about  4  per  cent,  net  lead.  Developments  have  proved 
that  the  orebodies  are  exceedingly  persistent  and  extensive, 
though  they  show  such  irregularities  that  it  requires  time  to 
demonstrate  this. 

The  formation  lies  approximately  flat,  though  grades  of  from 
3  to  10  per  cent,  are  not  uncommon.  It  has,  throughout  the 
district,  a  gentle  dip  toward  the  southwest.  The  ore  now  being 
mined  occurs  in  the  lower  100  ft.  of  the  St.  Joe  limestone,  and 
often  at  the  very  bottom  of  this  formation  in  contact  with  an 
underlying  sandstone.  Occasionally  it  happens  that  in  the 
100  ft.  just  mentioned  there  are  successive  enrichments,  making 
workable  orebodies  one  above  the  other.  In  this  case  more 
than  one  level  may  be  necessary.  But  it  is  more  common  to 
find  only  one  large  irregular  sheet  of  ore  immediately  above 
the  sandstone,  so  that  it  can  all  be  worked  from  one  level; 
although  sometimes  the  ore  may  shoot  up  some  distance  above 


LEAD 


257 


the  general  level.     The  upper  orebodies  are  relatively  unimpor- 
tant. 

In  the  Flat  River  district  proper,  these  orebodies  are  arranged 
in  several  parallel  zones  trending  N.  50  degrees  W.  These 
zones  lie  in  a  space  about  3|  miles  wide  from  N.E.  to  S.W.,  and 


258 


THE  COST  OF  MINING 


about  9  miles  from  N.W.  to  S.E.  It  is  expected  that  these 
zones  will  be  extended  materially  both  to  the  northwest  and  to 
the  southeast.  I  think  there  is  also  very  good  reason  to  expect 
that  other  zones  will  be  developed  southwest  of  those  now  worked. 
There  are  some  indications  already  of  three  such  new  zones  at 
the  west  end  of  the  district. 

I  do  not  know  why  the  ore  follows  this  N.W.-S.E.  course.  I 
have  never  been  able  to  see  any  system  of  persistent  fissuring 
in' that  course.  Most  of  the  fissures  have  a  course  of  E.-W.  to 
N.E.-S.W.  These  fissures  have  a  most  obvious  relation  to  the 
orebodies,  which  often  follow  them  out  long  distances  on  either 
side  of  the  real  ore  channel. 

The  sketch,  Fig.  14,  shows  this   relation  in  plan.     The   ore 


FIG.  14.  —  Sketch  showing  relation  of  orebodics  to  fissure,  S.  E.  Missouri. 

zone  may  carry  some  lead  scattered  through  the  rock  on  both 
sides  of  the  workable  channels,  which  may  be  only  5  ft.  wide. 
The  fissures  are  apparently  the  source  of  the  ore  from  which  it 
has  fed  out  into  the  surrounding  rocks.  The  richest  ore,  there- 
fore, is  right  at  the  fissure,  and  it  fades  out  on  either  side,  so  that 
midway  between  fissures  the  ore  may  be  too  poor  to  work. 

Fig.  15  is  a  longitudinal  section  of  the  ore  zone  across  the  fis- 


FIG.  15. — Sketch  showing  cross-section  of  orebodies  in  S.  E.  Missouri. 


LEAD  259 

sures,  showing  this  relation.     The  ore  is  workable  to  a  thickness 
varying  from  6  ft.  to  as  much  as  100  ft. 

EXPLORATIONS  IN  THE  SOUTHEAST  DISTRICT 

It  will  be  evident  from  the  above  that  the  exploration  of 
these  orebodies  by  the  sinking  and  drifting  methods  used  in  West- 
ern mines  would  be  difficult  and  unsatisfactory.  To  follow  the 
ore  underground,  it  is  almost  necessary  to  stope  the  ore  as  you 
go.  There  is  enough  vertical  irregularity  to  prevent  following 
the  ore  successfully  by  horizontal  drifts;  and  there  is  enough 
horizontal  irregularity  to  make  it  impossible  to  keep  in  the  chan- 
nel, unless  you  are  prepared  to  follow  up  each  turn.  If  the  ore 
rises  you  must  be  prepared  to  go  up  after  it;  if  it  sinks  you  must 
go  down  after  it. 

The  problem  of  blocking  ore  out  ahead  has  resolved  itself 
entirely  into  diamond  drilling  from  the  surface.  This  varies  in 
difficulty  according  to  the  depth.  The  formation  dips  slightly 
toward  the  southwest,  while  the  surface  rises  a  little  in  that 
direction.  The  southwestern  part  of  the  field  is,  therefore,  the 
deepest  part.  In  the  older  mines  at  Flat  River,  the  depth  to 
the  sandstone  is  only  300  to  400  ft.  In  the  newer  mines  like 
the  Derby  (Federal)  and  the  Hoffman  (St.  Joe)  the  depth  is 
500  to  600  ft.  In  the  deepest  part,  between  Leadwood  and  Iron- 
dale,  the  depth  is  from  500  to  800  ft.  When  the  depth  is  not 
over  550  ft.,  the  drilling  is  all  through  very  favorable  rock;  but 
where  it  is  deeper,  the  cherty  Potosi  limestone  comes  in.  This 
cherty  formation  is  very  hard  to  drill  through,  and  it  is  best, 
whenever  it  is  found,  to  use  a  churn  drill  through  that  formation, 
and  then  put  in  a  diamond  drill. 

The  drill  is  used  first  to  find  out  in  a  general  way  the  posi- 
tion of  the  ore  channel  by  running  a  line  of  holes  N.E.-S.W.  at 
intervals  of  about  200  ft.  When  lead  ore  is  found  that  looks 
worth  following  up,  holes  are  put  in  closer  in  the  attempt  to 
follow  it  in  its  usual  N.E.-S.W.  course.  If  ore  is  found  in  con- 
siderable amount  in  15  or  20  holes,  enough  is  blocked  out  to 
justify  sinking  a  shaft.  As  a  general  rule  it  is  not  found  desir- 
able to  try  to  map  out  the  orebody  accurately  by  drilling  until 
some  progress  has  been  made  in  stoping  it,  and  more  knowledge 
gained  about  its  peculiarities. 

Owing  to  the  soft  nature  of  the  richer  ore  streaks,  the  drill 


260  THE  COST  OF  MINING 

cores  invariably  give  an  underestimate  of  the  value  of  the  ore. 
Even  where  ground  is  most  carefully  drilled,  the  actual  mining 
shows  from  20  .to  100  per  cent,  more  lead  ore  than  the  drilling 
would  indicate.  It  is  very  common  to  have  blank  holes  in  the 
middle  of  a  good  orebody  through  grinding  up  of  the  ore  streaks. 
Owing  to  the  irregular  shape  of  the  deposit,  some  poor  ground 
is  apt  to  run  into  the  middle  of  the  space  occupied  by  the  ore. 
For  these  reasons  it  often  happens  that  one-half  the  holes,  even 
in  good  stoping  ground,  do  not  indicate  pay  ore. 

The  cost  of  drilling  for  many  years  went  constantly  upward, 
owing  to  the  increased  price  of  diamonds  and  of  labor.  Where 
drilling  could  be  done  ten  years  ago  for  40  to  50  cents  a  ft.,  in 
1907  it  cost  from  $1  to  $1.25  per  ft.  In  the  deeper  holes,  where 
the  Potosi  limestone  must  be  penetrated,  the  cost  probably  aver- 
ages $1.50  per  ft.  Perhaps  recent  events  have  reduced  these 
costs  again. 

The  above  description  refers  especially  to  the  mines  in  the 
vicinity  of  Flat  River  only.  At  Bonne  Terre  the  orebodies  are 
a  little  different,  in  that  the  longer  axis  there  seems  to  extend 
N.E.-S.W.,  instead  of  N.W.-S.E.  These  orebodies  are  northeast 
from  the  ore  zones  of  Flat  River.  It  now  seems  very  probable 
that  a  connection  will  be  established  between  Bonne  Terre  and 
the  Flat  River  orebodies. 

EXTENT  OF  THE  DISTRICT 

The  Flat  River  district  proper,  containing  developed  mines, 
is  a  quadrilateral  area  of  about  30  sq.  m.,  or  19,000  acres.  If 
we  extend  the  lines  so  as  to  take  in  Bonne  Terre  and  Irondale, 
we  get  a  triangular  area  of  about  60  sq.  m.,  or  38,000  acres.  This 
area  is  now  producing  metallic  lead  at  the  rate  of  about  100,000 
tons  a  year.  The  output  doubled  between  1901  and  1907. 

Outside  of  this  area  are  a  number  of  other  places  where  ores 
of  the  same  kind  have  been  mined.  At  Doe  Run,  Frederick- 
town,  and  Mine  La  Motte  are  important  occurrences  which  differ 
from  the  above-described  field  only  in  that  they  are  in  shallower 
basins  of  limestone,  which  are  interrupted  by  knobs  of  pre-exist- 
ing granite.  At  Fredericktown  the  ores  carry,  besides  lead, 
copper,  nickel,  and  cobalt.  At  the  North  American  mine  at 
that  place  considerable  ore  has  been  found  that  carries  5  per 
cent,  copper  and  2.5  per  cent,  nickel  and  cobalt.  Everything 


LEAD  261 

indicates  that  there  are  possibilities  of  extension  in  copper 
mining  in  that  neighborhood.  The  copper  ores  have  exactly  the 
same  structural  characteristics  as  the  orebodies  above  described, 
except  that,  instead  of  pure  galena,  the  ore  is  mainly  sulphides 
of  copper,  nickel,  and  cobalt. 

PROBLEM  OF  MINING  IN  THE  SOUTHEAST  DISTRICT 

The  most  difficult  part  of  actual  mining  operations  is  the 
preliminary  exploration  by  drilling.  This  determines  the  depth 
to  which  the  shafts  must  be  sunk,  and  their  location.  Usually 
only  one  level  is  necessary,  but  the  fact  that  the  ore  does  not 
lie  exactly  flat  makes  some  provision  for  hauling  cars  up  and 
down  hill  necessary.  This  can  best  be  done,  I  believe,  by  elec- 
tric haulage.  This  has  been  installed  at  one  of  the  Federal  plants 
and  is  very  effective.  Provision  must  also  be  made  sometimes 
for  secondary  pumping  to  raise  water  from  depressions  that  may 
reach  lower  than  the  shaft-pumping  station. 

The  stoping  is  very  simple.  No  timbers  are  used.  Round 
pillars  of  ore  are  left,  containing  10  to  15  per  cent,  of  the  ore. 
It  is  often  possible  to  leave  pillars  in  the  poorer  parts  of  the  de- 
posit by  laying  out  the  main  entries  so  as  to  follow  the  rich  ore 
along  the  fissures.  Underground  diamond  drilling  is  necessary 
in  some  mines  to  prospect  ahead  for  water  channels.  These 
are  open  fissures  that  carry  so  much  water  that,  if  broken  into 
carelessly,  they  make  disastrous  gushes.  Some  shafts  are  pretty 
wet,  making  1300  to  1500  gal.  of  water  a  minute.  The  usual 
output  from  each  shaft  is  about  300  tons  a  day.  This  output 
may  be  greatly  exceeded,  however,  by  the  use  of  electric  haul- 
age so  as  to  cover  a  large  area  from  one  opening.  Ventilation 
may  be  secured  by  drilling  large  churn-drill  holes  from  the 
surface. 

The  most  economical  power  equipment  used  in  the  district 
is  at  the  plant  of  the  St.  Louis  Smelting  and  Refining  Company. 
Here  a  central  steam  plant  operates  a  compressor  and  an  elec- 
tric generating  plant.  The  mill,  hoists,  and  pumps  are  operated 
by  electricity.  Electric  trams  are  also  used  to  haul  the  ore  from 
various  shafts  to  the  mill. 

The  cost  of  mining,  hoisting,  and  pumping  is  from  $1  to  $1.50 
per  ton.  To  this  may  be  added  10  cents  a  ton  for  drill  prospect- 
ing, and  about  10  cents  a  ton  for  hauling  the  ore  to  the  mill. 


262 


THE  COST   OF  MINING 


The  total  cost  of  ore  is,  therefore,  from  $1.20  to  $1.70  at  the 

mill. 

THE  PROBLEM  OF  MILLING  THE  ORES 

The  milling1  practice  is  now  pretty  well  established.  The  ore 
is  ground  to  9  mm.  Everything  smaller  than  9  mm.  is  screened  out 
as  soon  as  the  ore  passes  the  crusher.  When  crushed,  the  ore 
is  screened  to  various  sizes,  from  9  to  2  mm.,  and  this  product 
jigged.  The  tailings  from  the  coarser  jigs  are  all  re-ground.  The 
material  below  2  mm.  is  classified  and  treated  on  Wilfley  tables, 
as  are  also  the  re-ground  tailings.  Middlings  from  the  tables  are 
also  re-ground  in  Huntington  mills  and  treated  on  Frue  vanners. 

The  cost  of  milling  in  a  1000-ton  plant  is  from  30  to  75  cents 
per  ton.  The  cost  of  a  concentrating  mill,  together  with  a  power 
plant  for  the  mines,  may  be  estimated  at  $500,000  for  1000  tons 
capacity.  The  new  plant  built  by  the  Federal  Lead  Company 
handles  about  2400  tons  a  day.  It  is  built  of  steel  and  con- 
crete, has  a  large  air-compressing  and  electric  plant,  and  elabo- 
rate crushing  and  sampling  arrangements.  It  cost  $900,000. 

THE  PROBLEM  OF  SMELTING  THE  ORES 

Smelting  may  be  considered  either  on  a  custom  or  an  operat- 
ing basis.  The  ore  leaves  the  mill  in  the  shape  of  a  concentrate 
carrying  70  per  cent,  lead  and  5  per  cent,  moisture.  Freight  to 
East  St.  Louis  is  about  $1.50  per  dry  ton.  This  ore  may  be  sold 
to  custom  smelters,  who  will  pay  for  90  per  cent,  of  the  lead  at 
current  quotations,  and  charge  from  $6  to  $8  per  ton  smelting 
charges.  On  this  basis,  the  cost  of  freight  and  treatment  figures 
as  follows : 


Lead,  4  Cents 

Lead,  5  Cents 

Lead,  6  Cents 

Freight                

$1.50 

$1.50 

$1.50 

Treatment  say                                           .    . 

7.00 

7.00 

7.00 

Deduction  10  per  cent     140  Ifo 

5.60 

7.00 

8.40 

Total  . 

$14.10 

$15.50 

$16.90 

On  an  operating  basis  the  cost  is  about  $6  per  ton,  and  the 
loss,  with  the  best  practice,  3  per  cent.: 

1  Since  this  was  written  a  considerable  change  has  occurred  through  the 
extensive  use  of  Hancock  jigs. 


LEAD 


263 


Lead,  4  Cents 

Lead,  5  Cents 

Lead,  6  Cents 

Freight  and.  treatment 

$750 

$750 

$7  50 

Deductions  42  Ib.  lead  

1.68 

2.10 

252 

Total  

$9.18 

$9.60 

$10.02 

On  average  prices  there  would  be  a  saving  of  about  $5.50  per 
ton  of  concentrates  in  operating  a  smelter.  But  it  must  be 
remembered  that  the  above  costs  could  only  be  secured  by  a  plant 
handling  a  considerable  tonnage,  say  3000  to  4000  tons  a  month. 

Let  us  now  consider  the  cost  of  the  entire  operation  with  due 
regard  to  both  capital  and  operating  charges.  In  the  utter  lack 
of  any  official  statements  of  the  companies  operating  in  the  Flat 
River  district  I  shall  have  to  make  an  estimate  of  my  own,  with 
due  apologies  to  the  secretive  persons  who  control  the  mines 
for  rashly  guessing  at  their  secrets,  and  to  the  public  for  any 
inaccuracies. 

The  companies  operating  in  the  district  are  the  following: 


Mill  Capacity 

Shafts 
Operated 
1908 

Dividends 
Not  Stated 

Deslosre  Lead  Co 

800  tons  per  day 

3 

$6,308,357 

St.  Joe  Lead  Co  

2,700  tons  per  day 

8 

1,859,893 

Doe  Run  Lead  Co  
St.  Louis  Smelting  &  Refining  Co.  . 
Federal  Lead  Co 

800  tons  per  day 
1,500  tons  per  day 
3,000  tons  per  day 

4 
4 
6 

Not  stated 
Not  stated 
Not  stated 

Five  companies  

8,800  tons  per  day 

25 

Total  output  1908  estimated  at  100,000  tons  pig  lead.  If  we 
call  this  an  average  output  and  figure  that  the  mills  ran  300 
days  a  year,  we  get  a  total  of  2,640,000  tons  and  an  average  yield 
of  less  than  4  per  cent.  I  believe  that  this  is  an  overestimate 
for  tonnage  and  an  underestimate  for  yield  for  this  particular 
year,  but  not  for  the  long  run.  I  shall  base  my  calculations  on 
the  performance  of  this  district  on  a  yield  of  4  per  cent,  refined 
lead,  at  a  price  of  4J  cents  per  pound.  I  shall  exclude  from  my 
calculations,  as  usual,  the  money  paid  for  mining  land  on  the 
theory  that  that  is  a  part  of  the  profit  won  from  the  industry. 


264  THE  COST  OF  MINING 

I  shall  proceed  to  compute  the  capital  invested  in  the  industry 
and  figure  the  use  of  it  as  an  integral  part  of  the  operating  cost. 

CAPITAL  IN  EXPLORATION  OF  LANDS 

This  must  amount  to  about  $2,500,000.  The  greater  part  of 
this  has  been  spent  by  the  St.  Joe  and  Doe  Run  lead  companies, 
with  the  Federal  Lead  Company  (including  the  Central)  a  close 
third.  It  is  probable  that  the  ore  in  sight  is  sufficient  for  about 
seven  years. 

CAPITAL  IN  SHAFTS  AND  MINING  PLANTS 

This  I  estimate  at  $2,100,000,  being  $60,000  each  for  the 
twenty-five  shafts  in  operation  and  for  ten  other  shafts  discarded 
or  not  operating. 

CAPITAL  IN  MILLING  PLANTS  AND  POWER 

I  estimate  this  at  $4,400,000,  being  $3,400,000  for  plants  in 
use,  and  $1,000,000  for  discarded  plants,  experiments,  and  fail- 
ure. 

Capital  in  transportation  equipment  from  mines  to  mills, 
but  not  including  railroads  leading  out  of  the  district,  may  be 
estimated  very  roughly  at  $1,500,000. 

CAPITAL  IN  SMELTING  PLANTS 

Including  some  capacity  for  smelting  outside  ores,  this  amounts 
to  some  $2,500,000,  including  workmen's  houses,  lands  at  plants, 
etc. 

Working  capital,  $2,800,000,  being  equal  to  the  value  of  the 
lead  output  for  three  months. 

We  have  then: 

Capital  in  explorations $2,500,000 

Capital  in  mining  plants 2,100,000 

Capital  in  milling  plants 4,400,000 

Capital  in  transportation  plants    1,500,000 

Capital  in  smelting  plants    2,500,000 

Working  capital 2,800,000 

Total    $15,800,000 

This  is  equal  to  $6  per  ton  of  annual  output. 
The  use  of  this  capital  can  hardly  be  calculated  at  less  than 
10  per  cent,  which  is  sufficient  to  return  the  investment  in  fifteen 


LEAD 


265 


years  with  5  per  cent,  interest.  This  calculation  does  not  apply 
to  working  capital,  however,  for  that  is  a  quick  asset  that  can 
always  be  liquidated.  As  long  as  it  is  in  the  business,  however, 
it  must  be  considered  worth  5  per  cent.  We  have  then  for  amor- 
tization : 

10  per  cent,  on  $13,000,000  risked  in  business $1,300,000 

5  per  cent,  on      2,800,000  working  capital 140,000 


Total  annual  charge 


$1,440,000 


This  is  equal  to  $14.40  per  ton  lead  and  57.6  cents  per  ton  of  ore 
mined. 

The  depreciation,  or  current  construction  of  plants,  to  take 
care  of  changes  in  method,  improvements,  removals,  etc.,  should 
be  calculated  at  6  per  cent,  on  capital  invested.  This  will  equal 
$780,000,  accounting  for  $7.80  per  ton  of  lead  and  31.2  cents 
per  ton  crude  ore. 

We  have  now  covered  all  the  charges  incident  to  the  business 
except  the  current  operating  charges.  These  may  be  estimated 
as  follows,  giving  due  consideration  to  varying  conditions: 


Per  Ton,  Crude 

Per  Ton 
Concentrate 
Yield  65  Per  Cent. 

Per  Ton,  Pig  Lead 

Mining  and  hoisting  

$1.00    to  $1.50 

$25.00  to  $37.50 

Transfer  to  mills  

0.05    to    0.10 

1.25  to      2.50 

Milling  
General  expense    
Freight  to  St.  Louis  
Smelting 

0.30    to    0.50 
0.10    to    0.20 
.097  to    0.097 
.378  to      .378 

$1.60 

6.00 

7.50  to    12.50 
2.50  to      5.00 
2.44  to      2.44 
9  23  to      9  23 

Total  operating         .  . 

$1.925  to  $2.775 

$47.88  to  $69  17 

Add  depreciation  

.312  to      .312 

— 

7.80  to      7.80 

Dividend  cost    
Add  amortization  

$2.237  to  $3.087 
.576  to      .576 

— 

$55.68  to  $76.97 
14.40  to    14.40 

$2.813  to  $3.663 

— 

$70.08  to  $91.37 

We  find  that  the  mines  can  pay  dividends  on  what  remains 
above  from  2.8  to  3.85  cts  per  pound,  say  for  an  average  3.3 
cents.  They  can  justify  their  investment  at  a  price  of  from  3.5 
to  4.5  cents,  or  in  round  numbers,  4  cents  per  pound. 


266  THE  COST  OF  MINING 

This  I  believe  is  a  fair  exhibit  of  the  entire  business.  I  do 
not  pretend  that  the  mines  will  not  show  great  differences  from 
these  figures.  The  differences  I  have  placed  in  the  operating 
cost  columns  are  intended  to  cover,  for  mining:  the  difference 
between  a  thick  and  a  thin  orebody,  between  dry  and  wet  mines; 
in  milling,  the  difference  in  the  milling  quality  of  the  ores,  be- 
tween simple  and  elaborate  processes,  and  between  small  mills 
and  big  ones;  in  general  expense,  the  difference  between  simple 
and  elaborate  managements.  There  have  been  failures  in  the 
district.  I  am  striking  an  average  of  the  successes. 

That  these  figures  are  not  far  from  the  truth  may  be  gathered 
from  the  records  of  the  St.  Joe  Lead  Company,  which  paid  more 
than  $5,700,000  in  dividends  and  built  up  its  property  greatly 
from  an  output  of  about  300,000  tons  of  lead.  This  indicates  a 
profit  of  0.95  cents  per  pound.  Deducting  this  from  an  average 
price  of  4.5  cents  we  get  an  average  cost  of  3.55  cents,  less  what- 
ever surplus  may  be  credited  from  surplus  in  the  treasury.  The 
cost,  of  course,  fluctuates  with  the  times.  It  is  always  possible 
during  periods  of  depression  to  produce  more  cheaply  by  cutting 
wages  and  curtailing  construction  and  development;  on  the  other 
hand,  in  boom  times  wages  are  raised  and  people  embark  in  un- 
usual expenditures  for  expansion  and  development.  As  a  matter 
of  fact,  lead  was  sold  in  St.  Louis  from  the  Flat  River  district, 
in  the  years  following  the  panic  of  1893,  as  low  as  2.6  cents  per 
pound  without  loss;  but  in  the  boom  period  of  1906-7  it  is  doubt- 
ful if  any  of  the  mines  were  producing  it  for  less  than  4  cents. 


CHAPTER  XV 

SILVER-LEAD   MINING 

Characteristics  of  Coeur  d'Alene  region  —  The  Wardner  vein  —  Detailed  cost 
statements  and  records  of  Bunker  Hill  &  Sullivan  Mining  and  Con- 
centrating Company  —  Summary  of  present  operating  costs  —  Canyon 
Creek  mines  —  Average  costs  and  results  —  Smelting,  refining,  and 
marketing  —  Relations  of  mines  to  American  Smelting  and  Refining 
Company  —  Calculation  of  complete  mining  and  smelting  costs,  losses 
and  profits  on  Bunker  Hill  average  ore  —  Broken  Hill  district  in  Aus- 
tralia —  Smelting  costs  at  Broken  Hill  and  in  America  —  Silver-Lead 
mines  of  Park  City,  Utah  —  Average  costs  at  Daly- West  —  Daly- 
Judge  and  Silver  King  —  Smelting  costs  and  profits. 

THE  external  factors  which  affect  mining  in  the  Coeur  d'Alene 
are  the  most  favorable  of  the  whole  Rocky  Mountain  region. 
The  altitude  is  moderate;  the  climate  mild;  timber  and  water 
power  are  abundant  and  cheap.  Transportation  to  consuming 
centers  is,  however,  expensive,  and  wages  are  high.  Labor  is 
efficient  and  abundant.  The  mines  are  generally  deep,  meas- 
ured from  the  surface,  but  the  configuration  of  the  country  has 
permitted  their  attack  by  adit  levels;  so  that  most  of  the  ore 
has  not  needed  hoisting  from  great  depths,  and  pumping  opera- 
tions have  generally  been  inexpensive. 

The  internal  factors  are  favorable.  The  veins  are  typical 
fissures.  The  ore  is  galena,  which  seems  to  be  a  metasomatic 
replacement  of  pre-existing  veins  of  iron  carbonate.  Ransome 
believes  that  the  Burke  and  Revett  quartzites,  flaggy,  evenly- 
bedded,  light-colored  rock  about  3000  ft.  thick,  contain  nearly 
all  the  payable  ore,  although  veins  are  found  traversing  an  im- 
mense mass  of  slates  and  quartzites  of  presumable  Algonkian 
age,  some  over  and  some  under  the  productive  formations.  The 
whole  sedimentary  series  is  estimated  to  have  a  thickness  of  13,000 
ft. 

The  ore  shoots  are  persistent  and  profound,  with  a  thickness 
varying  from  8  to  100  ft.,  and  a  length  varying  from  100  to  1000 
ft.  normal  to  the  plunging  axis.  Single  bodies  have  produced 

267 


268  THE  COST  OF  MINING 

several  million  tons  of  ore.  The  ore  in  the  main  has  to  be  con- 
centrated. The  proportion  shipped  to  the  smelters  varies  from 
a  quarter  to  a  tenth  of  the  amount  mined.  Of  the  proportion 
shipped  a  considerable  amount  is  picked  out  by  hand  either  under- 
ground or  at  the  mill,  the  lower  grades  being  concentrated.  In 
addition  to  the  sorting  of  first-class  ore,  there  is  a  still  larger 
sorting  of  waste  in  the  stopes.  In  many  cases  it  is  necessary 
for  safety  to  fill  the  stopes,  and  in  all  cases  it  is  economical  to 
reject  waste.  The  various  mines  differ  greatly  in  the  amount  of 
sorting  and  filling  done.  Several  have  run  for  years  without 
shipping  any  first-class  ore  and  without  sorting  any  waste  in 
the  stopes,  everything  mined  being  sent  to  the  concentrator. 
On  the  other  hand,  one  prominent  mine,  the  Hercules,  ran  sev- 
eral years  without  a  mill,  shipping  only  first-class  ore. 

PKODUCING  MINES 

The  'mines  may  conveniently  be  divided  into  two  groups :  the 
Wardner  and  the  Canon  Creek.  In  Wardner  there  is  only  one 
vein  and  two  important  mines:  the  Bunker  Hill  &  Sullivan,  an 
independent  concern,  and  the  Last  Chance,  owned  by  the  Fed- 
eral Mining  and  Smelting  Company. 

The  Wardner  vein  has  been  the  subject  of  a  good  deal  of  liti- 
gation, and  has  been  well  and  often  described,  but  I  will  hazard 
a  new  idea  concerning  it:  The  principal  object  of  attention  has 
always  been  a  great  mineralized  fault  called  the  "foot-wall," 
having  a  strike  of  north  40°  west,  and  a  dip  of  45°  southwest. 
This  fault,  in  my  judgment,  originated  the  lead  mineralization 
of  the  district,  but  in  an  indirect  way.  It  intersects  some  veins 
whose  course  is  more  nearly  east  and  west,  or  even  north  70° 
east.  These  veins  may  originally  have  had  only  a  siderite  fill- 
ing. The  Bunker  Hill  fault  probably  reopened  these  veins  and 
started  the  lead  mineralization  which  replaced  a  large  part  of 
the  original  siderite.  The  fault  movements  continued  in  part 
after  the  lead  mineralization  had  made  considerable  progress, 
for  the  lead  ores  have  been  crushed  into  paste  along  the  foot- 
wall.  At  any  rate,  at  and  near  the  footwall  fissure  there  are  a 
number  of  powerful  ore  channels,  some  of  which  have  been  fol- 
lowed for  a  distance  of  3000  ft.  down  the  slope,  with  very  little 
or  no  change  in  their  value  or  character. 

The  mining  is  done  almost  wholly  by  the  filling  method. 


SILVER-LEAD  MINING  269 

Whether  square  sets  are  put  in  first  and  then  filled,  or  whether 
the  stopes  are  filled  without  timbering,  depends  on  the  firmness 
of  the  ground.  This  varies  in  different  parts  of  the  mines.  In 
nearly  all  cases  enough  waste  for  the  filling  can  be  sorted  out  of 
the  vein-stuff  itself. 

The  Bunker  Hill  mine  in  twenty-two  years  up  to  June  1, 
1908,  had  produced  as  shown  in  the  following  tables,  which  are 
much  more  complete  than  any  cost  statements  given  elsewhere 
in  this  volume.  It  would  be  scarcely  desirable  to  repeat  often 
mining  costs  at  such  length  in  a  work  such  as  the  present,  but 
these  details  will  undoubtedly  be  of  interest  to  many  students 
of  mining  problems.  Accordingly  I  shall  give  not  only  the 
figures  as  presented  in  the  reports  of  the  company  for  1908, 
but  also  some  comments  on  the  conditions  and  methods  em- 
ployed. 

The  first  table  shows  the  progressive  history  of  the  mine  from 
the  beginning,  in  various  periods.  In  this  the  reader  will  find 
everything  of  importance  relating  to  the  ores  of  the  mine;  but 
for  convenience  I  shall  calculate  out  the  avearge  contents  of 
the  shipping  product  for  the  whole  period  and  for  the  year 
1908. 

1908  22  Years 

Average  yield  per  ton  crude  ore,  lead  per  cent 9.8  9.68 

Ounces  silver,  ounces 3.84  3.82 

Average  contents  of  shipping  product  lead  per  cent 43.17  51.45 

Silver,  ounces 16.58  20.31 

It  will  be  observed  that  while  the  yield  of  the  crude  ore  per 
ton  is  almost  exactly  the  same  as  for  the  entire  period  the  grade 
of  the  shipping  product  has  dropped  about  15  per  cent.  No 
significance  attaches  to  this  except  that  in  recent  years  a  consid- 
erable tonnage  of  low-grade  concentrates  containing  less  than 
10  per  cent,  lead  and  a  high  percentage  of  iron  has  been  shipped 
on  account  of  its  favorable  fluxing  qualities.  In  earlier  periods 
no  such  ore  was  shipped.  Of  course  with  the  present  grade 
of  shipping  ore  the  cost  per  ton  will  be  considerably  different 
for  smelting  charges  than  with  the  higher  grade  of  past  ship- 
ments. 


270 


THE  COST  OF  MINING 


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SILVER-LEAD   MINING 


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272 


THE  COST  OF  MINING 


SILVER-LEAD  MINING 


273 


The  following  table  shows  the  stoping  cost  in  detail.  Nearly 
all  the  ore  comes  from  large  tabular  masses  having  a  dip  of 
only  30°  from  the  horizontal.  In  some  places  the  hanging  wall 
is  loose.  Most  of  the  ore  is  mined  in  square-set  rooms  that 
are  filled  with  waste,  either  sorted  from  the  orebody  or  obtained 
from  development  work,  almost  as  fast  as  the  ore  is  mined. 
Under  these  conditions  it  will  be  plain  to  any  mining  man  that 
the  costs  are  low.  The  statements  are  for  the  year  ending  May 
31,  1908. 

"Stoping.  —  The  mine  was  in  operation  for  the  full  period  of 
one  year,  and  produced  330,730  tons  of  concentrating  ore,  at  a 
cost  of  $511,288.16,  as  follows: 


Details  for  Labor  and  Supplies 

Total  for  the  Year 

Average 
per  Ton 
for  the 
Year 

Highest 
Cost  per 
Ton 
for  One 
Month 
during 
the  Year 

Lowest 
Cost  per 
Ton 
for  One 
Month 
during 
the  Year 

Foremen,      bosses,      blacksmiths, 
machinists,  tool  -packers,  etc. 
Timberman  and  carpenters    
Miners 

$60,982.27 
25,109.38 
125  148  48 

.185 

.076 
379 

.191 
.082 
400 

.165 
.063 
.339 

Carmen 

15  918  00 

048 

042 

058 

Shovelers  
Power  labor  .    . 

133,176.50 

7  708  40 

.403 
023 

.450 
.027 

.379 
.021 

Repair  labor 

7  492  70 

023 

025 

021 

Explosives  

30  019.37 

.091 

.111 

.087 

Illuminants  

7  482  08 

023 

026 

.017 

Lubricants 

1  329  87 

004 

004 

006 

Iron  and  steel  

4,158.20 

.013 

.014 

.012 

Miscellaneous  supplies  
Timber  and  lagging 

11,667.61 
61  629  00 

.035 
186 

.032 
.199 

.025 
.165 

Power  supplies 

7  876  30 

024 

024 

027 

Wood 

9  292  80 

028 

030 

030 

Stable  and  stock  

2,297.20 

.007 

.007 

.006 

Total    

511,288.16 

1.548 

1.664 

1.421 

Nov. 

May" 

The  stoping  of  shipping  ore  simply  represents  the  sorting  out 
of  a  variable  amount  of  high-grade  galena  to  be  shipped  direct 
to  the  smelters,  thus  avoiding  the  losses  in  the  concentrating 
mill.  It  will  be  observed  that  this  sorting  adds  something  to 


274 


THE  COST   OF  MINING 


the  cost.  On  this  ore  the  cost  of  concentrating  and  mill  losses 
are  avoided  altogether  so  that  this  is  the  most  profitable  product 
of  the  mine. 

"Shipping  Ore.  —  The  mine  also  produced  4340  tons  of  crude 
shipping  ore,  at  a  cost  of  $8,445.27,  as  follows: 


Highest 

Lowest 

Details  of  Labor  and  Supplies 

Total  for  the  Year 

Average 
per  Ton 
for  the 

Cost  per 
Ton 
for  One 
Month 

Cost  per 
Ton 
for  One 
Month 

during 

during 

the  Year 

the  Year 

Foremen,  bosses,  blacksmiths,  ma- 

chinists, tool-packers,  etc  .... 

$1,468.04 

.338 

.242 

.200 

Timbermen  and  carpenters  

255.20 

.059 

.071 

.027 

Miners 

1  808  25 

416 

503 

338 

Carmen    

260.00 

.060 

.073 

056 

Shovelers 

2  808  04 

647 

973 

575 

Power  labor  

80.10 

.018 

.036 

.011 

Repair  labor. 

102.70 

.024 

.030 

.021 

Explosives  

330.50 

.076 

.153 

.055 

Illuminants  

96.98 

.022 

.024 

.026 

Lubricants  

11.05 

.003 

.008 

.001 

Iron  and  steel  

51.30 

.012 

.018 

.015 

Miscellaneous  supplies 

171  81 

040 

.039 

032 

Timber  and  lagging  

847.10 

.195 

.290 

.136 

Power  supplies  

75.30 

.017 

.045 

.017 

Wood 

7890 

018 

041 

026 

Total    

$8  445  27 

1  945 

2  546 

1  536 

May 

April 

"  Making  the  total  ore  mined  335,070  tons,  at  a  total  cost  of 
$519,733.43." 

Tramming  in  this  case  represents  the  cost  of  taking  the  ore 
out  through  a  two-mile  tunnel  and  dumping  it  into  the  mill 
bins. 

"  Tramming.  —  The  electric  railroad  was  in  operation  for  the 
full  period  of  one  year,  during  which  time  it  delivered  to  the 
concentrator  335,070  tons  of  ore,  at  a  cost  of  $27,640.76,  as 
follows: 


SILVER-LEAD  MINING 


275 


Highest 

Lowest 

Average 

Cost  per 
Ton 

Cost  per 
Ton 

Details  of  Labor  and  Supplies 

Total  for  the  Year 

for  One 

for  One 

Month 

Month 

during 

during 

the  Year 

the  Year 

General  labor    .    . 

$1  200  00 

.003 

003 

004 

Trammers 

11  062  05 

033 

030 

036 

Power  labor  

2,773.37 

.008 

008 

010 

Repair  labor  

4,248  75 

013 

020 

007 

Illuminants 

30000 

001 

001 

001 

Lubricants  

470.00 

.001 

.001 

.001' 

Iron  and  steel  

32000 

001 

003 

Miscellaneous  supplies 

1  340  00 

004 

005 

003 

Power  supplies  

4,060.59 

.012 

013 

010 

Wood  

1,866.00 

.006 

.011 

Total 

$27  640  76 

082 

095 

079 

Feb. 

June 

"  During  the  above  period  of  one  year  the  railroad  was  in  opera- 
tion, 732  shifts  of  eight  hours,  of  which  42  shifts  were  lost,  as 
follows : 

24  shifts  on  account  of  Sunday  lay-off. 
4  shifts  on  account  of  July  4th. 
4  shifts  on  account  of  miner's  picnic. 
2  shifts  on  account  of  Thanksgiving  Day. 
2  shifts  on  account  of  Christmas. 
2  shifts  on  account  of  mill  shut-down. 
4  shifts  on  account  of  cold  weather,  stopping  operations. 

"  Besides  the  above  ore  there  were  trammed  20,800  tons  of 
waste,  making  the  average  work  of  the  railroad  486  tons  per 
shift,  or  515  tons  per  shift  of  actual  operation,  at  a  cost  per  ton 
of  ore  and  waste  handled  of  $.078.  This  cost  includes  hauling 
of  timbers  and  other  supplies  and  the  taking  of  the  larger  per- 
centage of  the  men  to  and  from  their  work." 

Concentrating  at  this  mine  represents  the  rejection  of  gangue 
to  the  extent  of  80  per  cent,  of  the  crude  ore.  The  process  con- 
sists of  rather  coarse  crushing,  jigging,  and  the  treatment  of  a 
considerable  proportion  of  fines  on  vanners  and  Wilfley  tables. 
The  cost  has  been  increasing  of  late  years,  owing  to  refinements 
in  the  process,  i.e.,  it  has  been  found  desirable  to  spend  more 


276  THE  COST  OF  MINING 

money  in  the  mill  to  make  a  higher  saving.     The  cost  has  gone 
up  as  follows : 

1905 18      cents 

1906 18.5  cents 

1907  24.4  cents 

1908 37.2  cents 

These  costs  are  for  operating  alone.  It  is  evident  that  this 
increase  of  cost  will  be  justified  by  the  saving  of  an  additional 
6  or  7  Ib.  of  lead  per  ton  milled.  I  imagine  the  results  are  far 
better  than  that. 

11  Concentration.  —  The  concentrator  was  in  operation  for  the 
full  period  of  one  year.  Of  the  366  days  there  were  lost  30^f 
days,  as  follows: 

150  hours  on  account  of  screens,  elevators,  and  rolls. 

55  hours  on  account  of  belts  and  Huntington  mills. 

34  hours  on  account  of  general  repairs. 

72  hours  on  account  of  holiday  lay-offs. 
218  hours  on  account  of  Sunday  lay-offs. 

48  hours  on  account  of  miner's  picnic. 

30  hours  on  account  of  electric  power  off. 

50  hours  on  account  of  slush  ice. 

11  hours  on  account  of  pulleys,  pumps  and  jigs. 

16  hours  on  account  of  short  of  ore. 
9  hours  on  account  of  repairs  to  tail  race. 

27  hours  on  account  of  short  of  water. 

10  hours  on  account  of  broken  line  shaft. 

"In  the  above  period  330,930  tons  of  ore  were  concentrated, 
making  the  average  work  of  the  concentrator  904  tons  per  day, 
or  say,  986  tons  per  24  hours  of  actual  operation. 


SILVER-LEAD  MINING 


277 


Detail  of  Labor  and  Supplies 

Total  for  the  Year 

Average 
per  Ton 
for  the 
Year 

Highest 
Cost  per 
Ton 
for  One 
Month 
during 
the  Year 

Lowest 
Cost  per 
Ton 
for  One 
Month 
during 
the  Year 

General  labor 

$15  226.58 

.046 

.067 

.034 

Millmen     .                            

46,129.07 

.139 

.150 

.127 

Laborers 

2,603.48 

.008 

.008 

.004 

Power  labor  

2,866.46 

.008 

.007 

.005 

Crusher  labor    .        

1,520.04 

.005 

.007 

.004 

Repair  labor                     .              .  . 

3,688.58 

.011 

.013 

.011 

Illuminants 

1  475.50 

.005 

004 

004 

Lubricants  

1,730.00 

.005 

.005 

.005 

Iron  and  steel  .        .    .        

930.00 

.003 

.002 

003 

Miscellaneous  supplies 

23  184  79 

070 

082 

064 

Lumber    

1,370.00 

.004 

.008 

.005 

Roll  shells  
Trommel  screens 

1,685.00 
1,336  00 

.005 
.004 

.005 
003 

.007 
003 

Crusher  supplies 

1  900  00 

008 

008 

005 

Wood   

13,310.80 

.040 

044 

028 

Power  supplies  

4  205  00 

.013 

007 

023 

Total    

$123,161.30 

.372 

420 

332 

Oct. 

April 

"Shipping  Expense.  —  We  shipped  72,468.80  tons  of  concen- 
trates and  middling  ore  and  4304.30  tons  of  crude  ore,  or  a 
total  of  76,773.10  tons,  at  the  following  expense: 


Total 

Cost  per  Ton 

General  labor 

$1  110  00 

$014 

Laborers    

3  256  09 

042 

Contractors  ... 

10418  86 

137 

Illuminants  .  . 

12060 

001 

Miscellaneous 

284  35 

004 

Representative  at  smelter 

14607 

002 

Total    

$15,335.97 

.200 

"  Superintendence  and  Office  Expenses.  —  Superintendence  and 
Office  expense  amounted  to  $28,726.03,  as  follows: 


278  THE  COST  OF  MINING 

Superintendence  and  surveying $16,440.00 

Bookkeeping  and  assaying     6,562.57 

Wood  and  illuminants 910.00 

Office  supplies 1,087.47 

Assay  supplies    1,310.00 

Telegrams  and  telephone  expense 523.51 

Sundries 1,892.48 


Total    $28,726.03 

11  Legal  Services.  —  Legal  services  amounted  to  $3000,  being 
the  salary  of  the  company's  local  attorney. 

"Contingent  Expense.  —  Contingent  expense  amounted  to 
$13,422.54  as  follows: 

"This  completes  the  list  of  direct  operating  charges  at  the 
mine,  but  it  does  not  end  the  expenditures  of  the  company.  We 
must  add  the  following: 

"All  other  Wardner  Expenditures,  aside  from  warehouse 
accounts,  were, 

Improvements    $109,272.08 

Taxes 59,646.98 

Insurance 3,853.84 

Real  estate    9,716.00 

Dividend  reserve    2,069.58 

Sale  of  electric  light 10,735.13 

Sale  of  water 823.82 

Purchase  of  mining  property 8,970.70 

Mine  office  fixtures    486.20 

Litigation 13,676.64 

Exploration 44,362.18 

—     $263,613.15 
Less  certain  local  receipts  at  Wardner  and  San 

Francisco 37,226.02 

$226,387.13  " 

To  these  expenses  must  be  added  for  freight  and  treatment 
on  ore  shipped  to  the  smelters  $1,004,896,  equal  to  $3  per  ton 
mined  and  $13.09  per  ton  shipped.  From  the  value  of  the  ore 
so  shipped  a  deduction  was  made  for  assumed  losses  of  $333,092, 
equal  to  $1  per  ton  mined  and  $4.35  per  ton  shipped. 

"Exploration.  —  Details  for  1908  and  ore  reserves  4846  feet  of 
drifts,  crosscuts,  raises  and  winzes  were  driven,  at  a  cost  of 
$44,362.18,  as  follows: 


SILVER-LEAD  MINING 


279 


Highest 

Lowest 

Average 

Cost  per 
Foot 

Cost  per 
Foot 

Details  for  Labor  and  Supplies 

Total  for  the  Year 

per  Foot 
for  the 

for  One 
Month 

for  One 

Month 

Year 

during 

during 

the  Year 

the  Year 

Foremen,  bosses,  blacksmiths,  ma- 

chinists, tool-packers,  etc    .  .  . 

$2,639.66 

.545 

.776 

.324 

Timbermen  and  carpenters  

180.75 

.037 

.128 

— 

Miners                                         .    •  •  • 

6,568.00 

1.355 

1.718 

.527 

Shovelers 

9  685.87 

1.999 

2.730 

1.195 

Contractors  

5,107.50 

1.054 

.994 

1.424 

Power  labor                  .        

2,511.50 

.518 

.537 

.458 

Repair  labor 

504.60 

.104 

.129 

.078 

Explosives  

7,516.50 

1.551 

1.847 

1.166 

Illuminants                

515.94 

.106 

.166 

.078 

Lubricants                                     .  •  • 

284.08 

.059 

.067 

.057 

Iron  and  steel 

29050 

.060 

.092 

.026 

Miscellaneous  supplies  

2,168.48 

.447 

.423 

.104 

Timber  and  lagging  

1,762.10 

.364 

.369 

.144 

Power  supplies 

2  348  40 

.485 

.739 

.401 

Wood   

2,278.30 

.470 

.696 

.200 

Total 

$44  362.18 

9.154 

11  411 

6.182 

Feb. 

June 

"The  above  development  has  given  to  the  property  a  tonnage 
of  standing  ore  ready  for  extraction  never  before  equaled  in 
amount  or  grade  during  the  many  years  of  operation  of  the  mines. 
The  most  valuable  and  extensive  developments  were  made  on 
No.  10  and  No.  11  levels,  in  the  Bunker  Hill  mine,  these  levels 
being  200  and  400  ft.,  respectively,  below  the  No.  9,  or  Kellogg 
tunnel,  level  and  the  deepest  levels  in  the  district.  Orebodies 
were  also  opened  in  the  Tyler  No.  8  level,  in  the  Stemwinder 
mine,  and  the  Vann  Intermediate,  in  the  Sullivan  mine.  Sink- 
ing of  the  shaft  from  the  Kellogg  Tunnel  level  has  been  accom- 
plished, and  at  the  present  date  (September,  1908)  has  reached 
a  depth  of  600  ft.  vertically  below  the  Kellogg  Tunnel,  where 
the  No.  12  level  is  to  be  established  and  crosscutting  for  the 
orebody  started.  This  should  be  completed  early  in  1909." 

"Ore  Reserves.  —  We  have  ore  reserves  partially  blocked,  of 
date  Oct.  12,  1908,  as  follows: 


280 


THE  COST  OF  MINING 


Stemwinder  mine 60,856  tons 

Sullivan  mine 903,247  tons 

Bunker  Hill  mine 1,845,575  tons 


Total 2,809,678  tons" 

We  may  summarize  the  whole  operation  as  follows: 


Cost 

Per  Ton 

Mined 
335,070  tons 

Per  Ton 
W 

Stoping  

$519,773.43 

$1.551 

$6.77 

Tramming    

27,640.76 

.082 

.36 

Concentrating    
Shipping 

123,161.30 
15,335.97 

.372 
.200 

1.60 
20 

Superintendence    
Legal  services 

28,726.03 
3,000.00 

.085 
.009 

.37 
04 

Contingent  expense  

13,422.54 

.040 

.18 

Construction,  taxes,  insurance,  explo- 
ration 

226,387.13 

676 

294 

Total  mining  and  milling     .    . 

$957,447.16 

$3  015 

$12  47 

Add  smelting  

3.000 

1303 

Total  costs 

$6  015 

$25  56 

COST  PER  POUND  LEAD 

The  number  of  pounds  lead  realized  may  be  computed  at 
227,  and  the  cost  per  pound  2.65  cents.  I  get  this  by  taking  the 
number  of  pounds  lead  realized  per  crude  ton,  196,  and  adding 
thereto  the  value  of  3.84  oz.  silver  in  lead  at  the  proportionate 
prices  for  the  year;  equaling  57.6  lb.;  making  a  total  of  253.6 
lb.,  less  10.3  per  cent,  deducted  for  loss,  leaving  a  total  of  227  lb. 
The  prices  received  for  lead  were  0.18  cents  per  pound  less  than 
the  New  York  market  prices,  but  as  this  deduction  did  not  apply 
on  the  silver  the  total  loss  on  this  account  may  be  calculated  at 
only  0.13  cents  per  pound  of  lead  equivalent.  Adding  this  to 
the  2.65  reached  above,  we  get  2.78  cents  as  the  real  cost  of  lead 
to  the  mining  company.  Of  course  this  includes  the  profit  made 
by  the  smelting  company  on  these  ores.  What  that  profit  is, 
there  is  no  means  of  calculating;  but  it  does  not  seem  improbable 
that  whatever  profit  is  made  in  smelting  would  represent  only  a 
fair  amortization  of  the  capital  required.  We  shall  not  be  far 


SILVER-LEAD   MINING  281 

wrong  if  we  take  a  round  figure  of  $2.75  cents  as  the  real  cost  of 
lead  from  this  mine  for  the  year. 

AVERAGE  RESULTS 
The  total  cost  of  operating  this  mine  has  been  in  summary: 

Current  operating  expense  —  per  crude  ton $2.665 

Creating  plant    800 

Total $3.465 

Thus  the  amortization  and  depreciation  charges  equal  just  30 
per  cent,  of  the  current  operating  charges. 

CANYON  CREEK 

The  Canyon  Creek  mines  differ  from  the  Wardner  mines 
only  in  the  shape  of  the  orebodies.  The  dip  is  not  far  from  ver- 
tical; the  ore  shoots  are  much  longer,  thinner,  and  more  regular. 
Wages  average  46  cents  an  hour,  4  cents  higher  than  in  Ward- 
ner. Details  of  cost  are  not  given. 

The  Federal  Mining  and  Smelting  Company  for  three  years 
reported  as  follows: 

OPERATIONS  OF  THE  FEDERAL  MINING  AND  SMELTING  COMPANY  FOR  THE  LAST 

THREE  YEARS 

Total  tons  mined  and  milled 2,428,112 

Tons  lead  in  shipping  product 166,912 

Ounces  silver  in  shipping  product 10,300,049 

Percentage  lead 6.87 

Ounces  silver  per  ton    4.24 

Value  of  product    $24,310,441 

Smelting,  refining,  and  deductions 10,514,773 

Net  value  to  mining  company 13,795.668 

Profits  reported    6,160,247 

Total  cost    7,635,421 

Cost  per  ton,  mining  and  milling  crude  ores 3.14 

Cost  per  ton,  concentrates  shipped 22.03 

Smelting,  refining,  and  marketing  concentrates 30.35 

It  will  be  seen  that  these  figures  indicate  conditions  similar 
to  those  of  Wardner.  Further  elaboration  of  detail  seems 
unnecessary.  The  costs  are  higher  than  at  the  Bunker  Hill, 
but  the  difference  at  the  mine  is  to  be  explained  by  the  factors, 
(1)  higher  wages,  (2)  a  greater  amount  of  hoisting  and  pumping, 


282 


THE  COST  OF  MINING 


(3)  a  charge   for  railroad  transportation  from  mines  to   mills, 

(4)  a  greater  'number  of  power  and  mining  plants  to  maintain, 
and  a  higher  power  cost.     In  each  case  these  factors  are  inherent 
to  the  problem  and  cannot  be  removed. 

The  cost  of  mining  and  milling,  of  construction,  of  freight  and 
treatment;  and  the  value  of  the  ore  to  the  mines,  free  from  smelter 
deductions  for  a  period  of  five  years  during  which  the  average 
price  of  lead  in  New  York  was  4.6  cents  and  of  silver  59.2  cents, 
are  given  for  a  number  of  properties  in  accompanying  tables: 


.  S.  GEOLOOIC4L 


ROFES8IONA.L  PAPER.  NO.  62     PL.  XXVH 


,'MAP    SHOWING    PLAN    OF    DEVELOPMENT    OF    STANDARD-MAMMOTH    MINE. 
From  tfie  company's  surveys.     Top -is  north. 


FIG.  17. 


SILVER-LEAD   MINING 


283 


COST  AND  VALUE  OF  ORE  PER  TON  AT  Six  MINES  FOR  FIVE  YEARS 
(NEW  YORK  PRICES:  LEAD,  4.6c;  SILVER,  59.2c.) 


0 

M 

tt 

o 

•sl 

« 

a 

i 

Tons 

'S3 

1 

ed  g 

^  <u 

•     0 

•"U 

1 

•a 

[§)S 

"caB 

g 

<£ 

c3  d 

c3 

I 

r 

H 

•a 

& 

Hecla    

402,000 

$3.43 

$0.47 

$3.90 

$2.56 

$6.46 

$9.57 

$3.11 

Standard    

1,244,571 

2.91 

0.15 

3.06 

2.37 

5.43 

7.29 

1.86 

Tiger-Poorman  .  .  . 

488,675 

2.94 

0.10 

3.04 

1.71 

4.75 

4.99 

0.24 

Morning   

924,416 

1.96 

0.15 

2.11 

2.51 

4.62 

5.42 

0.80 

Last  Chance  

670,164 

2.66 

0.08 

2.74 

2.99 

5.73 

8.19 

2.46 

Total  and  aver- 

ages   

3,729,826 

— 

— 

$2.90 

$2.43 

$5.33 

$6.93 

$1.60 

ESTIMATED  AVERAGE  VALUE  OF  CHIEF  ITEMS 

Smelter  deductions    $1.50 

Loss  in  milling,  20  per  cent.     (In  some  of  these  mines  where  no 
first-class  ore  is  shipped,  the  loss  is  probably  greater;  where 

a  good  deal  is  picked  out  the  loss  is  probably  less) 2.11 

Gross  value  of  ore  before  milling,  at  N.  Y.  quotations 10.54 

Per  cent,  lead,  before  milling 8.66 

Ounces  silver  per  ton,  before  milling   4.33 

Cost  to  mine  per  pound  lead  at  New  York 3.54  cents 

Cost  to  mine  per  ounce  silver  at  New  York   46  cents 

Cost  of  lead  in  New  York  (actual  cost)   3.36  cents 

Cost  of  silver  in  New  York  (actual  cost)   43.5  cents 

If  these  mines  were  all  owned  by  the  American  Smelting  and 
Refining  Company,  and  the  cost  of  the  whole  process  from  mine 
to  market  were  to  be  given,  it  would  probably  be  something  as 
follows  : 


Total  value  recovered  per  ton 

Cost  of  mining,  milling,  and  construction. 
Cost  of  smelting,  refining,  and  marketing . 
Profit  per  ton  


$8.00 
2.90 
3.20 
1.90 


The  Hercules  mine  has  the  following  interesting  record,  the 
tonnage  being  given  in  selected  crude  shipping  ore  and  concen- 
trates; 


284  THE  COST  OF  MINING 

Tons  shipped    56,446 

Current  mining  and  milling  cost $10.38  j    _ 

Construction .      13.64 1 

Freight  to  smelter 11.15  j 

Treatment  charges 8.52  J 

Total  cost $43.69 

Total  value  free  of  deductions 82.69 

Profit  per  ton  39.00 

This  mine  started  without  capital  and  created  its  plant  out 
of  ore.  It  is  interesting  to  note  how  this  affects  the  cost  of 
mining  and  also  to  compare  the  costs  with  those  of  the  Bunker 
Hill  &  Sullivan  which  went  through  the  same  process.  In  twenty 
years  the  Bunker  Hill  mined  about  3,400,000  tons  of  ore  out  of 
which  it  built  up  its  plant,  paid  for  costly  litigation  involving  its 
very  life,  and  fought  several  disastrous  strikes  at  a  cost  of  about 
$1  a  ton  in  addition  to  its  current  operating  cost  of  $2.60. 

If  the  Hercules  mined  one  ton  of  concentrates  to  four  of  crude, 
its  costs  were  for  five  years : 

Current  operating,  per  ton $2.60 

Cost  of  plant 3.41 

Doubtless  when  this  mine  shall  have  reached  the  age  of  the 
Bunker  Hill  its  cost  for  construction  will  have  diminished  to 
about  the  figure  attained  by  the  latter  company. 

COST  OF  SMELTING,  REFINING  AND  MARKETING 

I  have  considered  results  as  they  are  to  the  mining  companies. 
It  is  interesting,  in  order  to  compare  the  results  in  the  Cceur 
d'Alene  with  those  obtained  elsewhere,  to  see  what  the  actual 
cost  for  smelting,  refining,  and  marketing  is,  and  thus  find  how 
the  figures  would  stand  if  the  mining,  milling,  and  smelting  were 
all  done  by  one  concern. 

It  appears  from  the  reports  of  the  largest  two  companies 
that  the  average  ore  shipped  carries  about  46  per  cent,  lead  and 
from  18  to  28  oz.  silver.  Let  us  average  the  silver  at  23  oz. 
We  may  assume  an  average  price  for  lead  in  New  York  to  be 
4.60  cents  per  pound  and  silver  60  cents  per  ounce.  At  these 
rates  our  average  ore  will  be  worth  as  follows: 

Lead,  920  lb.,  at  4.6  cents    $42.32 

Silver,  23  oz.,  at  60  cents 13.80 

Total    .  .    $56.12 


SILVER-LEAD  MINING  285 

On  this,  however,  the  smelters  only  pay  $45.95,  deducting 
$10.17  for  losses;  in  addition  to  which  they  charge  about  $16  for 
freight  and  treatment,  making  a  total  of  $26.17  per  ton. 

APPROXIMATE  COST  OF  SMELTING  CCEUR  D'ALENE  ORE 

Freight  on  ore  to  Denver  at  $8  per  ton,  allowing  for  6  per  cent,  moisture  $8.51 

Freight,  bullion  to  New  York  (46  per  cent,  of  $6.40) 2.90 

Refining  bullion,  lighterage,  etc.  46  per  cent,  of  $8.67    3.99 

Losses  (silver,  4  per  cent. ;  lead,  6  per  cent.) 3.10 

Costs  at  blast  furnaces  (Ingalls) 5.28 

Total    .' , $23.78 

Profit  on  this  basis  $2.40  per  ton. 

Such  a  profit  spread  over  the  crude  ore  mined,  averaging 
about  6§  tons  to  each  ton  of  concentrates  smelted,  is  only  about 
35  cents  a  ton.  It  does  not  seem  in  the  slightest  degree  unrea- 
sonable. It  is  even  possible  that  the  real  profits  do  not  equal 
this  amount  because  Mr.  Ingalls  may  have  underestimated  the 
capital  employed  in  the  smelting  business.  (See  following  chap- 
ter on  Silver-Lead  Smelting.)  He  states  the  cost  of  a  smelting 
plant  at  $3  per  annual  ton.  This  may  be  sufficient  for  a  suc- 
cessful plant,  but  a  very  large  concern  like  the  American  Smelt- 
ing and  Refining  Company  finds  its  business  migratory.  This 
involves  discarding  plants  from  time  to  time.  This  means  the 
investment  of  large  sums  in  mistakes.  Taking  this  element  into 
consideration  the  smelting  rates  for  the  Coeur  d'Alene  ores  seem 
all  the  more  reasonable. 

Let  us  then  return  to  the  Bunker  Hill  &  Sullivan,  the  only 
mine  for  which  our  figures  are  complete,  and  calculate  the  whole 
process  through,  including  both  capital  and  operating  costs  and 
milling  and  smelting  losses  as  they  would  be  if  the  mine  were 
owned  by  the  American  Smelting  and  Refining  Company.  We 
have  the  actual  costs,  grade  of  ore,  and  prices  realized  by  the 
mining  company  for  a  period  of  over  twenty  years.  There  is 
no  reason  to  believe  that  if  it  started  over  again  it  would  get 
any  better  results,  so  that  it  seems  best  to  take  them  with  no 
alteration,  except  to  assume  average  prices  of  4.6  cents  for  lead 
and  60  cents  for  silver.  This  is  more  nearly  like  the  experience 
of  the  history  of  the  smelting  company.  During  the  life  of  the 
mine  the  position  of  silver  has  changed  profoundly.  It  would 
be  interesting  to  figure  on  the  same  terms  for  the  American 


286  THE  COST  OF  MINING 

• 

Smelting  and  Refining  Company  also,  but  since  that  is  impos- 
sible it  seems  best  to  apply  the  average  results  deduced  by  Mr. 
Ingalls  for  the  last  seven  years. 

ASSAY,  CRUDE 
Lead,  %  Silver,  oz.  Gross  Value 

Tons  mined,  3,591,880 11.28               4.92                 $13.33 

Milling  losses 1.62                1.10                     2.15 

Recovery  by  milling    9.66                3.82                   11.18 

Cost  of  mining   $2.665 

Cost  of  plant 800 

Total  cost  to  mining  company  excluding 

purchase  of  land 3.47 


Tons  shipped,  675,858 51.45  20.31 

Value  per  ton  shipping  product,  gross $59.52 

Freight  to  smelter 8.51 

Freight  to  refining  51  per  cent,  of  6.40    3.26 

Refining  51  per  cent,  of  8.67 4.42 

Loss  in  smelting  and  refining  lead,  6  per  cent 2.84 

Loss  in  smelting  and  refining  silver,  3  per  cent 37 

Reduction  to  bullion 5.28 


Total  smelting  costs  per  ton  concentrate 21.47 

Tons  crude  ore  per  ton  concentrate 5.31 

Cost  smelting  and  refining  per  ton  crude 4.04 

Total  costs  mining 3.47 

Total  costs  smelting    4.04                        7.51 

Total  losses  milling 2.15                         2.75 

Total  losses  smelting .60 

Total  costs  and  losses 10.26 

Profit  per  ton 3.07 

FAIRNESS  OF  CUSTOM  SMELTING  RATES 

If  we  proceed  to  calculate  the  cost  of  lead  we  get  a  surprising 
result.  The  lead  equivalent  in  the  ore  is  230  Ib.  actually  saved. 
Dividing  this  into  the  total  cost  of  S7.51  we  get  3.265  cents  per 
pound  as  the  total  selling  cost  of  lead  from  the  Bunker  Hill  lode. 
The  surprising  thing  is  that  this  cost  is  higher  than  the  actual 
cost  to  the  mining  company  for  1908  by  nearly  ^  cent.  While  it 
is  true  that  in  this  case  we  are  figuring  on  a  higher  mining  cost 
by  46  cents  a  ton  than  those  for  1908,  that  only  accounts  for 
0.2  cents  per  pound,  leaving  0.26  cents  still  to  be  accounted  for. 
In  my  calculation  of  smelting  costs  I  have  assumed  reduction 


SILVER-LEAD  MINING  287 

in  Denver  and  refining  on  the  Atlantic  coast.  It  seems  probable 
that  a  saving  is  made  on  these  figures  by  smelting  at  more  favor- 
able points  for  freight  rates.  But  whatever  saving  can  be  thus 
secured  is  not  likely,  at  the  best,  to  counterbalance  the  apparent 
loss  to  the  smelting  company.  We  are  driven  to  conclude  that 
the  Coeur  d'Alene  ores  are  treated  at  exceedingly  favorable  rates 
on  account  of  the  use  of  their  lead  contents  as  a  collector  for 
precious  metals  in  other  ores.  Mr.  Ingalls  calculates  that  an 
average  percentage  of  lead  in  the  charge  is  10  per  cent.  This 
would  be  about  12^  per  cent,  in  the  ore  treated.  If  we  take  the 
latter  figure  and  assume  that  the  smelting  company  only  charges 
the  ore  with  the  refining  of  that  amount  of  bullion  we  may  reduce 
the  cost  for  freight  and  refining  of  bullion  to  $1.90  per  ton  instead 
of  $7.68  (freight  $3.26,  refining,  $4.42).  On  this  basis  the  smelt- 
ing company  comes  out  whole. 

At  any  rate  the  conclusion  seems  warranted  that  there  is  no 
sound  basis  for  adverse  criticism  of  the  American  Smelting  and 
Refining  Company  for  its  treatment  of  the  Coeur  d'Alene  mines. 
On  the  contrary,  it  undoubtedly  gives  better  terms  to  the 
operators  than  they  would  be  able  to  secure  by  smelting  for 
themselves. 

COSTS  IN  THE  BROKEN  HILL  DISTRICT 

For  an  interesting  comparison  let  us  turn  from  the  Coeur 
d'Alene  to  the  Broken  Hill  district  in  Australia,  where  the  Broken 
Hill  Proprietary  mine  is  by  far  the  greatest  lead-silver  producer 
in  the  world.  This  property  has  produced  in  eight  years  of  which 
reports  are  available  to  me,  4,001,969  long  tons  of  ore,  which 
yielded  398,470  long  tons  of  lead,  35,504,331  oz.  silver,  and 
32,886  oz.  gold.  Reducing  this  to  terms  of  short  tons  in  order 
to  make  comparison  with  American  mines  more  obvious,  we 
have  4,482,202  short  tons,  yielding  9.95  per  cent,  lead,  7.92  oz. 
silver,  and  0.008  oz.  gold.  The  cost  for  mining,  concentrating, 
smelting,  refining,  marketing,  general  expenses,  and  depreciation 
has  been  exactly  $9  per  ton. 

The  cost  statements  issued  by  this  company  look  upon  the 
whole  operation  as  a  unit,  i.e.,  no  sharp  line  is  drawn  between 
mining,  concentrating,  and  smelting.  As  nearly  as  I  can  judge, 
however,  the  costs  per  ton  for  the  year  1906  were  as  follows: 


288  THE  COST  OF  MINING 

Short  tons  mined,  653,362 

Cost  for  mining  and  development $3.01 

Concentration 1.06 

Smelting,  refining,  and  marketing 3.86 

General  expense  and  depreciation    75 

Total    $8.68 

These  costs  seem  to  be  near  enough  the  average  to  give  a  fair 
conception  of  the  general  results.  The  figures  covering  depreci- 
ation are  adequate.  About  $2,000,000  has  been  written  off  the 
accounts  in  eight  years  and  the  whole  plant  of  this  great  concern 
stands  on  the  books  at  the  end  of  the  period  at  only  $1,933,575. 
There  were  3,000,000  tons  of  ore  then  developed. 

The -costs  of  this  mine  are  high,  owing  to  unfavorable  external 
factors.  The  climate  is  extremely  arid;  the  country  is  a  desert. 
Fuel,  water,  labor,  and  transportation  are  all  expensive.  As  a 
good  example  let  us  take  the  fuel  and  flux  account  which  amounted 
to  $1.39  per  ton,  about  twice  as  much  as  would  be  required  for 
mining  and  smelting  the  same  amount  of  Cceur  d'Alene  ore  at 
the  points  where  the  work  is  done.  Mine  timber  costs  30  cents 
per  ton  mined,  twice  as  much  as  at  the  Bunker  Hill.  These 
figures  indicate  such  a  set  of  external  factors  as  to  explain  why 
it  costs  $4.07  per  ton  for  mining  and  concentrating  at  the  Broken 
Hill  against  $3  or  less  in  the  Cceur  d'Alenes.  The  internal  fac- 
tors for  mining  are  good. 

On  the  smelting  side  we  find  that  the  proportion  to  be  smelted 
is  high,  being  one  ton  in  2.9,  against  one  ton  in  3.84  at  the 
Bunker  Hill.  The  actual  cost  for  smelting,  refining,  and  market- 
ing Broken  Hill  concentrates  is  $11.19  per  ton  smelted.  This 
includes  freight  on  ores  from  the  mine  at  Broken  Hill,  N.  S.  W., 
to  Port  Pirie,  which  is  $2.12  per  short  ton.  It  does  not  seem  to 
include  freight  on  bullion  from  Port  Pirie  to  market.  Costs 
mean  the  production  of  metals  ready  for  delivery  at  Port  Pirie. 
These  facts  seem  to  permit  of  the  following  comparison  with 
American  results  on  Cceur  d' Alene : 

SMELTING  COSTS  OF  BROKEN  HILL  AND  CGEUR  D'ALENE  ORES 

Broken          Cceur 
Hill  d'Alene 

Freight  from  mine  to  smelter,  neglecting  moisture    $2.12  $8.00 

Freight,  smelter  to  refinery    2.90 

^melting    1  5.28 

Refining T'  3.99 


SILVER-LEAD  MINING  289 

It  appears,  therefore,  that  for  equivalent  work  the  American 
practice  in  smelting  costs  about  the  same  as  the  Australian.  We 
find  that  Broken  Hill  ores  averaging  28.8  per  cent,  lead  cost  for 
actual  smelting  and  refining  $9.07  per  ton  against  $9.27  per  ton 
for  smelting  and  refining  Coeur  d'Alene  ores  averaging  46  per 
cent.  lead.  The  freight  in  American  practice  performs  the  triple 
function  of  bringing  the  ores  nearer  to  bases  of  fuel  supply,  of 
bringing  them  in  contact  with  other  ores  that  can  be  profitably 
smelted  in  conjunction,  and  of  bringing  them  nearer  the  markets 
where  they  are  to  be  finally  sold. 

If  the  freight  items  are  to  be  neglected  entirely  the  compari- 
son is  unfair  to  the  Broken  Hill  work,  because  that  company, 
while  not  paying  freight  on  its  ore  beyond  Port  Pirie,  does  pay 
freight  on  its  fuel  and  other  smelting  supplies  to  Port  Pirie.  We 
are,  therefore,  brought  to  conclude  that  there  are  no  figures  for 
determining  just  what  differences  there  are  in  smelting  and 
refining  costs  between  the  Broken  Hill  and  the  American  works. 
It  is  quite  plain  that  mining  and  milling  are  more  costly  in  Broken 
Hill  than  in  the  Cceur  d'Alene  and  that  for  this  the  unfavorable 
external  factors  of  the  Australian  desert  are  a  sufficient  explana- 
tion. 

Taking  the  average  cost  of  working  the  Broken  Hill  ores  at 
$9  per  ton  and  assuming  that  the  products  sell  in  the  proportion 
of  3.15  cents1  per  pound  for  lead,  and  60  cents  per  ounce  of  silver, 
we  find  that  Broken  Hill  ores  are  worth  $11  a  ton,  and  that 
lead  during  the  period  reviewed  has  cost  2.78  cents  per  pound, 
silver  49  cents  per  ounce,  and  gold  $18  per  ounce. 

LEAD  AND  SILVER  FROM  PARK  CITY,  UTAH 

In  this  important  district  there  are,  (1)  ore  deposits  in  fault 
fissures,  and  (2)  replacement  deposits  in  limestone.  Of  the 
fissure  veins  worked  thus  far  only  one,  the  Ontario,  has  been 
remunerative.  It  seems  that  geologically  the  ores  are  all  of 
fissure  origin.  A  great  flat  formation  of  quartzite  is  overlaid  by 
200  ft.  of  limestone;  the  limestone  is  covered  in  turn  by  a  bed  of 
soft  black  shale.  Faults  traversing  the  formation  produce 
fracturing  in  the  quartzites  and  limestones,  and  form  channels 

1 1  have  assumed  4.6  cents  per  pound  as  an  average  price  for  American  lead. 
The  tariff  makes  the  difference. 


290  THE  COST  OF  MINING 

for  the  ready  circulation  of  water;  in  the  shales  the  fissures  are 
entirely  closed  up. 

The  result  is  that  the  mineralization  caused  by  waters  flowing 
upward  through  fissures  is  stopped  by  the  shale  and  compelled 
to  seek  out  lateral  channels  in  the  limestone.  Waters  of  this 
origin  have  caused  the  deposition  of  important  orebodies  in  the 
limestones  and  quartzites.  The  fissuring  has  served  to  facilitate 
the  circulation  laterally  fully  as  much  as  vertically.  In  some 
cases  the  ultimate  source  of  the  mineralization  is  unknown;  but 
in  other  cases  the  flat  ore  shoots  in  the  limestone  were  fed  from 
the  Ontario  fissure. 

The  Ontario  mine  was  practically  worked  out  many  years  ago. 
Since  1893  most  of  the  ore  has  come  from  the  limestone  deposits. 
Of  these  the  principal  mines  are  the  Daly- West,  the  Daly-Judge 
and  the  Silver  King.  These  mines  are  very  similar.  The  ore- 
bodies  usually  have  a  pitch  of  between  5  and  15°  from  the  hori- 
zontal, and  are  from  50  to  200  ft.  wide,  and  from  3  to  30  ft.  thick. 
They  follow  fissures,  and  hence  have  fairly  well  defined  courses 
for  considerable  distances,  but  they  frequently  leave  one  fissure 
to  follow  another.  Where  the  limestone  is  brecciated  at  the  inter- 
section of  fissures  the  orebodies  are  largest. 

The  original  ore  was  a  mixture  of  sulphides  of  iron,  lead,  cop- 
per, and  zinc,  carrying  considerable  silver  and  some  gold.  Oxida- 
tion has  effected  an  important  rearrangement.  Nearest  the 
surface  the  ores  are  lead  carbonates  free  from  zinc;  lower  are 
lead  sulphides  rich  in  silver,  but  free  from  zinc;  lower  still  there 
has  been  an  important  regeneration  of  zinc-blende,  and  at  this 
zone  the  ores  are  much  inferior  in  lead  and  silver  content.  The 
zinc  regeneration  is  immediately  above  the  unaltered  sulphides; 
these  are  sometimes  payable,  but  have  not  been  worked  much. 

COSTS  AT  PARK  CITY  MINES 

A  great  deal  of  gangue  occurs  in  the  ore  and  must  be  sorted 
out.  At  the  same  time  much  of  the  ore  is  high-grade  and  can- 
not be  improved  by  concentration;  one-third  to  one-half  of  the 
ore  mined  is  of  this  character.  Exploration  and  development 
are  expensive,  owing  to  the  dip  and  irregularity  of  the  orebodies. 
These  internal  factors  make  the  costs  high. 

The  external  factors  are  about  the  average  for  the  Rocky 
Mountain  region. 


SILVER-LEAD  MINING 


291 


DALY-WEST  PRODUCTION  IN  SEVEN  YEARS  Tons 

Crude  ore  shipped  direct 224,418 

Ore  milled 489,415 

Total    713,833 

Concentrates  shipped    97,634 

Total  shipments 322,052 

Lead,  73,942  tons,  at  $92 $6,800,000 

Silver,  17,167,000  oz.,  at  57  cents 9,785,000 

Gold,  13,847  oz.,  at  $20.67 280,000 

Copper,  12,164,000  lb.,  at  15  cents 1,800,000 

Total  value  $18,665,000 

$58  per  ton 

Freight,  treatment,  and  deductions $8,327,000  =  $25.83  per  ton 

Cost  of  mining  and  milling 13.72  per  ton 

Total  cost    $39.58  per  ton 

Profit  per  ton  shipped    18.42 

RESULTS  PER  TON  MINED 
Average  value,  $28.40. 

Cost  of  mining  and  milling $6.26 

Milling  losses,  average  8  per  cent.1 2.24 

Freight,  smelting,  refining,  and  deductions 11.66 

Total  cost   $20.16 

Profit  per  ton  mined  8.24 

1  See  explanation  below. 

SUMMARY  OF  DALY-WEST  COSTS  —  1900  TO  1906  INCLUSIVE 

Per  Ton  Per  Ton  Ore 

Mined  and  Milled 

General  expense  $0.42  $  0.92 

Exploration  and  development   0.60  1.31 

Mining 3.38  7.40 

(Per  ton  milled)  (1.36) 

Milling 1.00  2.19 

Construction  0.30  0.66 

Shipping  and  selling    0.56  1.24 


$6.26 


$13.72 


One  may  indulge  a  little  skepticism  as  to  the  accuracy  of  these 
reported  savings  in  the  lead.     It  seems  that  the  ore  must  have 


292 


THE  COST  OF  MINING 


been  assayed  for  lead  by  fire  assay  which  gives  inaccurate  results, 
or  there  must  have  been  errors  in  sampling  and  weighing.     I 

MILL  SAVING  REPORTED 


Lead,  Per  Cent. 

Silver,  Per  Cent. 

1900                                                    

92. 

67.69 

1901                     

92.87 

70.16 

1902                                      

93. 

72. 

1903                                                            

97.9 

72.3  - 

1904                     

99. 

70.5 

1905                                        

99.5 

72.5 

1906 

98.44 

73.04 

prefer  to  believe  that  the  saving  of  lead  was  about  the  same  as 
that  reported  for  silver.  We  may  lump  the  whole  mill  saving 
roughly  at  75  per  cent.  On  this  basis  the  mill  losses  would  be 
about  8  per  cent,  of  the  entire  product. 

The  Daly-Judge  mine  is  west  of  the  Daly- West,  and  the  ore- 
bodies  are  in  the  zone  of  zinc  regeneration,  or  in  the  original 
sulphides  underlying  that  zone.  The  mine  has  not  been  very 
profitable.  Attempts  have  been  made  to  improve  the  mill 
from  time  to  time  and  the  result  has  been  a  considerable  cost 
for  construction,  but  since  the  improvements  do  not  seem  to 
guarantee  future  earnings  the  construction  should  probably  all 
be  charged  to  operating. 

Six  YEARS'  OPERATION,  DALY-JUDGE  MINE  (213,000  TONS) 

Lead,  19,375  tons $1,785,000 

Silver,  1,390,000  oz 792,000 

Gold,  4,800  oz 99,000 

Copper,  272,000  Ib 41,000 

Zinc,  8,614  tons 900,000 

Total  value  $3,617,000 

Cost  of  smelting,  refining,  and  marketing  and  smelter  deductions 

total $1,845,000 


(losses) 

Mining  and  milling  costs 
Probable  mill  losses  . 


per  ton 


$8.66 
7.27 
3.00 


Total  costs  and  losses. 
Profit  . 


$18.93 
1.00 


Total  value  of  ore  as  mined 


$19.93 


SILVER-LEAD  MINING  293 

DETAILS  OF  COST  FOR  1907 

Mining $3.03 

Exploration  and  development 0.40 

Concentrating 0.95 

Shipping  and  selling    0.33 

General  expense 0.53 

Construction 0.21 

Total $5.45 

These  costs  are  lower  than  the  average.  During  the  period 
under  review  the  mine  was  shut  down  for  two  years  in  order  to 
prosecute  development.  Development  in  the  whole  period  has 
averaged  about  $1.50  per  ton. 

The  Silver  King  is  a  rich  and  profitable  mine.  It  does  not 
publish  reports,  but  its  costs  are  approximately  $9.40  per  ton 
mined  and  milled  and  $15.50  per  ton  of  selected  ore  and  concen- 
trates shipped.  The  ore  is  richer  than  the  Daly-West  in  lead 
and  much  richer  in  gold,  but  about  the  same  in  silver. 

The  Park  City  ores  present  the  following  factors  making  high 
costs:  (1)  Relatively  small  orebodies  that  must  be  followed  over 
large  areas,  thus  establishing  a  high  cost  for  exploration  and 
development;  (2)  a  careful  selection  of  the  ores  and  the  rejection 
of  large  amounts  of  waste;  (3)  a  large  percentage  to  be  smelted 
and  a  very  high  charge  for  smelting. 

SMELTING  COSTS  APPLIED  TO  PARK  CITY  ORES 

Let  us  take  the  average  ore  produced  by  the  Daly-West 
mine  and  calculate  smelting  results  on  it,  assuming  a  freight 
rate  of  $1.50  per  ton  to  Salt  Lake  from  the  mines,  and  prices  of 
4.6  cents  per  pound  lead,  15  cents  per  pound  copper,  and  60  cents 
per  ounce  silver.  Let  us  assume  also  that  all  refining  is  done  at 
the  Atlantic  seaboard.  The  lead  and  copper  together  amount 
to  almost  exactly  25  per  cent,  of  the  ore. 

The  assay  of  shipping  product  is  as  follows: 

Gross  Value 
New  York 

Lead 22.96  per  cent.  =  $21.12 

Copper 1.89  per  cent.  =      5.67 

Silver  53.31  ounces      =    31.99 

Gold  . . .  .043  ounces    =        .87 


$59.65 


294  THE  COST  OF  MINING 

Freight  to  Salt  Lake  on  concentrates $1.50 

Freight  to  New  York  on  bullion  25  per  cent,  of  $10.80 2.70 

Refining  25  per  cent,  of  $8.67 2.17 

Reduction  to  bullion 5.28 

Losses    3  per  cent,  silver 0.96 

6  per  cent,  lead 1.27 

33£  per  cent,  copper 1.89            4.12 

4.12         $15.77 

The  actual  deductions  for  freight,  treatment  and  losses,  were 
$25.86  per  ton,  so  that  we  must  estimate  a  profit  of  $10.09.  This 
is  a  very  different  result  from  that  obtained  in  the  case  of  Cceur 
d'Alene  ores. 

Assuming  that  these  figures  are  not  far  from  the  truth,  and 
assuming  2.2  tons  mined  to  one  ton  shipped,  we  have  for  the 
whole  problem  of  silver-lead  ores  at  Park  City  the  following  min- 
imum costs  per  ton  mined,  as  shown  by  the  experience  of  the 
last  seven  years: 

Mining,  milling,  and  all  costs  to  mining  company $6.26 

Smelting,  refining,  and  marketing 7.17 

Total    $13.43 

Since  mill  losses  must  be  estimated  at  not  less  than  10  per 
cent,  on  low-grade  ores  and  smelting  losses  at  5  per  cent,  more, 
the  actual  costs  can  only  be  85  per  cent,  of  the  original  value. 
In  round  numbers,  therefore,  an  ore  in  Park  City  must  be  worth 
$15  a  ton  before  there  can  be  a  profit  in  it  for  anybody.  At 
average  prices  this  figures  about  11  per  cent,  lead  and  9  oz. 
silver. 


CHAPTER  XVI 
THE  COST   OF   SILVER-LEAD   SMELTING1 

Blast-furnace  operation  —  Roasting  —  Cost  of  smelting  plant  —  Calcula- 
tion of  interest  and  amortization  —  Functions  of  copper  in  lead  smelt- 
ing —  Freight  and  refining  —  Cost  of  refineries  —  American  Smelting 
and  Refining  Company  —  History  and  statistics  —  Tonnage  smelted  — 
Average  grade  of  ore  —  Growth  of  profits  —  Division  of  ore  value  — 
Costs  and  contracts  on  average  ores  —  Conclusions  regarding  derivation 
of  profits. 

THE  cost  of  smelting  and  refining  in  the  United  States  ranges 
widely  among  the  various  plants,  depending  upon  the  size  and 
nature  of  the  plant;  the  cost  of  labor,  fuel,  fluxes,  and  material; 
the  character  of  the  ores  smelted,  etc.  Thus,  nine  plants  during 
the  same  period  of  six  months,  a  few  years  ago,  showed  costs 
of  smelting  referring  to  the  blast-furnace  operation  only,  per  ton 
of  charge  (ore  and  flux),  which  ranged  from  $2.50  to  $4.80.  This 
appears  in  the  following  list:  A,  $3.418;  B,  $2.525;  C,  $3.260;  D, 
$3.331;  E,  $3.754;  F,  $3.429;  G,  $3.929;  H,  $4.039;  I,  $4.781. 
Average,  $3.607. 

In  the  treatment  of  the  argentiferous  ores  of  the  West,  the 
present  practice  is  to  roast  only  those  that  are  low  in  lead,  and 
charge  raw  into  the  blast-furnace  the  rich  galena.  The  cost  of 
roasting  is  $2  to  $2.50  per  ton  of  ore  roasted.  The  cost  of  smelt- 
ing a  ton  of  charge  in  a  large  modern  plant,  under  favorable  con- 
ditions, is  about  $2.50,  of  which  about  84  cents  is  for  coke  and 
$1.66  for  labor,  power,  and  supplies.  The  expense  of  administra- 
tion amounts  to  about  16  cents  additional.  Consequently,  the  total 
cost  per  ton  of  charge  (ore  and  flux)  is  about  $2.66.  If  the  ore 
amounts  to  80  per  cent,  of  the  charge,  which  corresponds  to  the 
ordinarily  good  practice,  the  cost  per  ton  of  ore  is  about  $3.33. 

1  This  article  is  a  condensation  of  one  published  originally  in  Eng.  and  Min. 
Journ.,  of  Aug.  15,  1908.  While  the  present  article  is  greatly  condensed  from 
the  original,  certain  points  have  been  amplified  and  figures  have  been  brought 
up  to  date. 

295 


296  THE  COST  OF  MINING 

An  average  of  the  work  of  many  large  smelting  plants  shows 
that  for  every  ton  of  charge  smelted  in  the  blast  furnace,  about 
0.4  ton  of  material  (ore  and  matte)  must  be  roasted.  The  cost 
of  roasting  ranges  from  $2  to  $2.50  per  ton.  Taking  the  lower 
figure,  in  view  of  economies  that  have  been  effected  by  the  blast- 
roasting  process,  we  may  figure  that  on  the  average  80  cents  is 
to  be  added  to  the  cost  of  smelting,  making  the  total  cost  per  ton 
of  ore  about  $4.12.  Figuring  on  the  same  basis  of  80  per  cent, 
of  ore  in  the  charge,  the  average  for  the  nine  works  previously 
mentioned  would  be  $3.607  -^  0.80  =  $4.50  approximately. 

Interest  Charges ,  Amortization,  etc.  —  Works,  capable  of  smelt- 
ing 1000  tons  of  ore  per  day,  or  roughly  330,000  tons  per  annum, 
cost  nearly  $1,000,000,  or  about  $3  per  ton  of  annual  capacity. 
Reckoning  amortization  at  10  per  cent,  per  annum,  and  interest 
on  the  investment  at  6  per  cent.,  the  smelter  must  add  48  cents 
per  ton  of  ore  smelted  on  account  of  these  fixed  charges.  More- 
over, the  smelter  is  bound  to  carry  a  large  stock  of  ore  on  hand. 
Assuming  that  the  works  which  is  treating  330,000  tons  of  ore 
per  annum  has  always  30,000  tons  on  hand,  and  that  the.  average 
value  of  the  ore  is  $30  per  ton,  the  interest  charge  on  each  ton  of 
ore  smelted  is  upward  of  15  cents.  A  month's  delay  in  realizing 
on  the  products  adds  15  cents  more.1  This  makes  a  total  of  $5.28 
up  to  the  production  of  base  bullion.  The  smelter  recovers 
about  95  per  cent,  of  the  lead  and  97  per  cent,  of  the  silver  in  the 
original  ore.  He  pays  the  miner  for  only  90  per  cent,  of  the  lead 
and  95  per  cent,  of  the  silver,  wherefore  he  has  a  certain  leeway 
on  these  medals,  as  he  may  have  also  on  gold  for  which  he  pays  the 
miner  only  95  per  cent.,  but  recovers  100  per  cent.2 

1  It  will  appear  subsequently  that  this  estimate  of  the  time  that  ore  and 
crude  metal  are  in  process  of  treatment  is  under,  rather  than  over,  the  average. 
As  a  matter  of  fact  smelters  roughly  figure  interest  on  the  basis  of  90  days. 

2  The  actual  extraction  of  lead  is  less  than  95  per  cent.,  but  in  good  practice 
it  is  95  per  cent,  on  the  basis  of  fire  assay,  on  which  much  of  the  ore  is  pur- 
chased, so  it  is  proper  to  figure  95  per  cent.     However,  this  is  drawing  it 
rather  tightly  upon  the  smelter,  and  considering  the  further  loss  of  1  per  cent, 
which  the  lead  suffers  in  refining  the  smelter  who  pays  for  90  per  cent,  of  the 
lead  in  the  ore  does  not  obtain  any  great  margin  on  this  item,  nor  does  he 
on  the  purchase  of  the  silver.     The  smelter  does  not  really  recover  100  per 
cent,  of  the  gold,  although  he  may  apparently  do  so,  and  even  more,  because 
of  the  cumulative  effect  of  small  amounts  of  gold,  too  little  to  figure  in  the 
ore  settlements,  which  give  the  smelter  more  to  start  with  than  his  books 
show. 


THE  COST  OF  SILVER-LEAD  SMELTING  297 

Copper.  —  Besides  the  gold,  silver,  and  lead  of  the  ore  there 
is  a  certain  amount  of  copper,  modern  practice  demanding  the 
presence  of  0.5  to  1  per  cent,  in  the  charge  in  order  to  insure  a 
clean  slag.  This  copper  goes  partly  into  the  slag,  and  partly 
into  the  base  bullion  (from  which  it  is  recovered  during  the  refin- 
ing process),  but  chiefly  it  is  obtained  in  the  form  of  matte,  which 
is  concentrated  up  to  about  40  per  cent,  copper  and  then  is 
despatched  to  Omaha,  where  it  is  converted  into  blister  copper. 
The  converting  of  this  leady  matte  is  more  costly  than  the  treat- 
ment of  ordinary  copper  matte,  and  indeed  throughout  the 
lead  smelting  process  copper  is  subject  to  high  losses,  especially 
in  the  slag  of  the  first  smelting,  which  follows  from  the  common 
metallurgical  principle  that  losses  are  quantitatively  constant  (or 
nearly  so)  and  proportionately  variable.  Consequently  in  the 
treatment  of  an  ore  so  low  in  copper  as  0.5  to  1  per  cent,  the  per- 
centage of  loss  is  large.  It  may  be  generalized  as  30  per  cent. 
It  is  for  this  reason  that  the  smelter  makes  so  large  a  deduc- 
tion from  the  copper  in  the  ore  (1.3  units  from  the  wet  assay) 
and  pays  for  it  at  3  to  7  cents  less  than  the  price  of  refined  copper 
at  New  York.  Of  course  it  will  be  understood  that  the  deduc- 
tion of  1.3  units  pertains  to  ores  that  contain  sufficient  copper 
to  deserve  payment,  and  that  those  ores  when  mixed  with  many 
others  that  contain  no  copper  give  an  average  furnace  charge 
with  0.5  to  1  per  cent,  copper.  It  may  be  explained  also  that 
all  of  the  copper  does  not  finally  appear  as  refined  metal,  a  fairly 
large  quantity  being  obtained  and  marketed  as  bluestone.  In 
the  generalization  which  I  am  attempting  it  is  impossible  to  go 
far  into  these  details. 

Freight  and  Refining.  —  The  products  of  the  smelteries  are 
base  bullion  and  lead-copper  matte.  The  latter  goes  to  Omaha 
for  converting  and  the  blister  copper  thence  is  passed  on  to  Perth 
Amboy  for  refining.  The  base  bullion  goes  to  Denver,  Omaha, 
Chicago,  and  Perth  Amboy.  As  in  the  case  of  smelting  there 
are  differences  among  these  works  as  to  the  cost  of  refining  and 
other  conditions,  but  inasmuch  as  the  prices  for  lead  and  copper 
are  based  on  the  market  at  New  York  it  is  best  to  confine 
attention  to  the  refining  and  handling  of  base  bullion  at  that 
center. 

The  freight  rate  on  base  bullion  from  Salt  Lake  City  to  New 
York  is  $10.80  per  ton;  from  Denver  and  Pueblo  to  New  York  it 


298  THE  COST  OF  MINING 

is  $6.40  per  ton.  The  cost  of  refining  is  $6  to  I6.50.1  Other  costs 
are  lighterage,  $0.625;  selling,  $0.40;  miscellaneous,  $0.325.  This 
gives  a  total  of  $7.60  exclusive  of  freight.  The  cost  of  a  lead 
refinery  is  about  $6.66  per  ton  of  annual  capacity,  on  which  amor- 
tization at  10  per  cent,  and  interest  at  6  per  cent,  come  to  $1.07, 
making  the  total  cost  of  refining,  lighterage,  selling,  etc.,  about 
$8.67.  Consequently,  the  charges  on  a  ton  of  ore  smelted  at  Salt 
Lake  and  yielding  10  per  cent,  of  lead  are  as  follows:  Smelting, 
$5.28;  freight  on  bullion,  $1.08;  refining,  etc.,  $0.87;  total,  $7.23. 

In  addition  to  this  total,  the  reports  of  the  American  Smelting 
and  Refining  Company  indicate  a  general  expense  amounting  to 
25  to  40  cents  per  ton  of  ore  smelted,  the  smaller  figure  being- 
achieved  in  the  more  recent  years.  Consequently  we  may  put  the 
total  cost  of  smelting  and  refining  at  about  $7.50  per  ton  of  ore. 

In  custom-refining  it  is  the  practice  to  pay  the  smelter,  i.e., 
the  seller  of  the  base  bullion,  for  the  gold  at  $20  per  ounce;  for 
the  silver  at  the  New  York  price  less  1  cent  per  ounce  (this  is 
98  per  cent,  when  silver  is  worth  50  cents  per  ounce) ;  and  lor 
the  lead  at  98  per  cent,  of  the  New  York  price.  The  actual 
extraction  of  lead  is  99  per  cent.  The  loss  of  silver  is  so  small 
that  it  may  be  disregarded  for  present  purposes. 

American  Smelting  and  Refining  Company.  —  The  reports  of 
this  company  throw  but  little  light  upon  the  subject  of  the  cost 
of  smelting.  Its  statement  of  assets,  gross  earnings,  profits,  etc., 
for  a  series  of  seven  years,  is  given  in  the  accompanying  tables. 
Before  proceeding  to  discuss  these  figures,  it  is  important  to 
make  certain  explanations.  In  each  year  the  figures  are  for  the 
fiscal  period  ending  April  30,  wherefore  the  major  part  of  the 
period  pertains  to  the  preceding  calendar  year.  The  item  that 
I  have  entered  as  "  Repairs "  is  given  in  the  reports  of  the  com- 
pany as  "Ordinary  Repairs  and  Betterments."  What  I  have 
called  "  General  Expense "  includes  all  of  the  general  expenses  of 
administration,  together  with  interest  and  taxes.  "Net  Earn- 
ings," so-called  by  the  company,  are  evidently  not  properly 
designated,  being  merely  the  operating  profit.  The  true  profit, 
or  actual  net  earnings,  appears  later  in  what  the  company  calls 
"Net  Income."  Under  "Improvements,"  I  have  entered  what 
the  company  calls  "Appropriation  for  Extraordinary  Improve- 

1  At  Chicago  the  cost  is  only  $4,  and  under  favorable  conditions  lead 
refining  should  be  done  at  that  figure. 


THE  COST  OF  SILVER-LEAD   SMELTING 


299 


ments  and  New  Construction."  From  the  uniformity  of  this 
account,  I  judge  that  it  represents  chiefly  the  new  construction 
undertaken  to  replace  worn-out  or  antiquated  plant;  in  other 
words,  it  is  in  this  way  that  the  company  makes  good  the  depre- 
ciation of  its  property,  which  otherwise  would  have  to  appear  in 
an  amortization  account. 

Except  in  its  recent  statement  to  the  New  York  Stock  Ex- 
change that  the  average  amount  of  ore  smelted  is  3,500,000  tons 
per  annum,  the  smelting  company  has  never  made  any  statement 
of  its  production  of  metals  or  amount  of  ore  smelted.  The  near- 
est that  it  has  come  to  communicating  this  important  informa- 
tion was  in  the  report  for  the  fiscal  year  ended  April  30,  1903, 
wherein  it  stated  that  the  volume  of  business  transacted  during 
the  year  is  reflected  in  the  following  figures:  Metal  content  of 
ore  purchased:  gold,  1,025,132  oz.;  silver,  62,389,438  oz.;  lead, 
492,960,350  lb.;  copper,  47,919,666  Ib.  Fuel  consumption:  coal, 
544,790  tons;  coke,  433,431  tons;  fuel  oil,  3,523,904  gal.  Freight 
traffic:  total  tonnage  moved,  4,434,484. 

I.  A.  S.  AND  R.  Co.  COMPARATIVE  STATEMENT  OF  ASSETS 


Year 

1903 

1904 

1905 

Property  account    

$86  845  671 

$86  845  671 

$86  845  671 

Investment  account 

1  028  598 

1  680  306 

(a)  3  982  576 

Metal  stock  (Au.,  Ag.,  Pb.,  Cu.)   .  . 
Material,  fuel,  flux    

18,010,687 
1,107  253 

17,032,300 
1  224  688 

16,418,543 
1  118902 

Cash 

2  339  154 

4  047  423 

4  636  649 

Total  assets   

$109  331,362 

$110830387 

$113  002  340 

(a)  Does  not  include   177,510   shares  of  the   common   stock,    American 
Smelters  Securities  Company,  par  value  $17,751,000. 
(6)  Includes  $500,526  as  "net  current  assets." 


Year 

1906 

1907 

1908 

Property  account    

$86,845,671 

$86  845  671 

$86  845  671 

Investment  account  
Metal  stock  (Au.,  Ag.,  Pb.,  Cu.) 
Material,  fuel,  flux 

(a)  4,179,915 
19,415,200 
1  114  893 

(a)  3,810,595 
18,251,587 
1  317  544 

3,950,088 
17,519,664 
1  380  742 

Cash 

4  757  929 

6  706  984 

5  629  034 

Total  assets   

$116,313,607 

$116,932,381 

(6)  $115,825,725 

(a)  Does  not  include   177,510  shares  of  the  common  stock,   American 
Smelters  Securities  Company,  par  value  $17,751,000. 
(6)  Includes  $500,526  as  "net  current  assets." 


300 


THE  COST  OF   MINING 


II.     A.  S.  AND  R.  Co.     COMPARATIVE  STATEMENT  OF  INCOME  ACCOUNT 


Year 

1902 

1903 

1904 

1905 

1.  Earnings  

$7,038,682 

$9,403,711 

$9,425,443 

$10,506,683 

2.  Repairs  

791,306 

770,854 

818,141 

878,648 

3.  General  expense 

1,385,757 

1,056,786 

701,729 

729,224 

4.  Net  earnings  .  .  . 

4,861,619 

7,576,786 

7,905,573 

8,898,811 

Employees'  fund  .  .  . 

— 

— 

91,254 

216,816 

6.  Improvements  . 

— 

655,683 

597,582 

425,289 

7.  Metal  account   . 

1,300,000 

1,500,000 

500,000 

637,795 

8.  Net  income  .... 

3,561,619 

5,421,103 

6,716,737 

7,618,912 

9.  Dividends  

3,500,000 

3,500,000 

4,750,000 

6,000,000 

10.  Surplus  for  year 

61,619 

1,921,103 

1,966,737 

1,618,912 

11.  Total  surplus  .  . 

2,951,968 

4,873,071 

6,839,808 

8,458,720 

Year 

1906 

1907 

1908 

1    Earnings    

$11,665,886 

$13,250,058 

$9,403,282 

2.  Repairs    
3.  General  expense  
4.  Net  earnings  
Employees'  fund  
6.  Improvements    

828,582 
675,945 
10,161,358 
449,204 
938,100 

976,535 
763,854 
11,509,669 
540,420 
1,054,996 

933,130 
836,866 
7,633,287 
Nil. 
622,096 

7.  Metal  account  
8.  Net  income   
9.  Dividends   
10.  Surplus  for  year  ...... 
11    Total  surplus 

Nil 

8,774,055 
6,750,000 
2,024,055 
10  482  775 

Nil. 
9,914,253 
7,000,000 
2,914,253 
13  397,028 

Nil. 
7,011,191 

11,191 
13,408,219 

Tonnage  of  Ore  Smelted.  —  These  data  enable  us  to  arrive 
approximately  at  the  amount  of  ore  purchased,  and  we  may 
assume  that  the  amount  smelted  was  approximately  the  same. 
It  is  a  fair  assumption  that  the  ores  were  purchased  in  substan- 
tially the  proportions  required  to  make  a  suitable  smelting  mix- 
ture, and  that  the  lead  content  was  in  the  neighborhood  of  10 
per  cent,  of  the  total  ore.  The  purchase  of  246,480  tons  of  lead 
would  therefore  imply  2,464,800  tons  of  ore.  Some  of  the  cop- 
per purchased  was  included  with  the  lead  charge,  but  some  was 
smelted  separately.  As  to  this  particular  I  can  do  no  more  than 
surmise  that  100,000  tons  of  copper  ore  may  have  been  smelted 
separately,  and  that  the  total  amount  of  ore  smelted  by  the  com- 
pany in  this  year  was  about  2,564,800  tons.  It  will, appear  that 


THE  COST  OF  SILVER-LEAD  SMELTING  301 

this  estimate  is  probably  not  far  out  of  the  way.  In  1901  the 
American  plants  of  the  company  alone  were  smelting  at  the  rate 
of  about  2,000,000  tons  of  ore  per  annum,  and  from  that  time 
onward  business  increased.  In  the  fiscal  year  ending  April  30,' 
1903,  the  total  movement  of  freight  is  given  as  4,434,484  tons. 
Deducting  991,221  tons  for  fuel  (allowing  13,000  tons  for  the  oil) 
and  270,439  tons  of  lead  and  copper,  we  have  left  3,172,824  tons 
for  ore  and  limestone,  of  which  the  latter  would  normally  be 
about  one-sixth,  deducting  which  there  remains  2,644,018  tons 
for  ore.  There  is  some  traffic  in  matte  and  other  products  from 
one  works  to  another,  but  making  allowance  for  such  duplica- 
tions and  overestimates  it  seems  not  unreasonable  to  assume 
2,500,000  tons  of  ore  smelted.  On  this  basis,  namely  2,500,000 
tons,  it  appears  that  the  total  actual  profit  to  the  company  in 
the  year  ending  April  30,  1903,  was  a  little  less  than  $2.20  per 
ton  of  ore.  Inasmuch  as  this  is  determined  by  making  the  ton- 
nage the  divisor  of  the  whole  profit  of  the  company  and  it  is  not 
to  be  doubted  that  even  in  1902-03  the  company  was  making 
handsome  returns  from  its  mercantile  and  investment  accounts. 
I  believe  it  is  reasonable  to  assume  that  its  profit  in  smelting 
properly  considered,  at  that  time  may  have  been  about  $2  per 
ton.  Mr.  Edward  Brush,  of  the  company,  before  the  Ways  and 
Means  Committee,  December  16,  1908,  stated  that  in  the  fiscal 
year  ended  April  30,  1908,  the  company  smelted  3,372,750  tons 
of  ore.  The  net  profit  in  that  year  was  $7,011,191.  Conse- 
quently the  total  profit  per  ten  of  ore  was  a  little  less  than 
$2.08.  The  actual  smelting  profit  was,  of  course,  something  less, 
because  the  company  realizes  more  or  less  from  its  various 
ventures  that  are  not  to  be  referred  directly  to  its  smelting 
business. 

Average  Grade  of  the  Ore.  —  The  figures  given  for  the  fiscal 
year  ending  April  30,  1903,  also  convey  valuable  information 
respecting  the  average  metal  contents  of  the  ore  smelted  in  the 
United  States  and  Mexico.  Proceeding  still  on  the  assumption 
that  the  total  tonnage  was  2,500,000,  the  average  was  0.41  oz. 
gold,  24.95  oz.  silver,  197.4  Ib.  lead,  and  19.17  Ib.  copper.  The 
substantial  accuracy  of  this  deduction  is  confirmed  by  the  report 
of  the  census  for  1904.  (The  census  confusingly  designates  the 
year  as  1905,  because  its  investigation  was  made  at  that  time, 
but  the  investigation  related  to  1904.)  According  to  the  census, 


302  THE  COST  OF   MINING 

the  amount  of  argentiferous  ore  treated  in  1904  was  2,271,724 
tons,  which  yielded  an  average  of  0.42  oz.  gold,  16.53  oz.  silver, 
198  Ib.  lead,  and  22.72  Ib.  copper.  It  is  to  be  remarked  that  the 
figures  of  the  census  relate  only  to  ore  smelted  in  the  United 
States,  while  my  previous  figures  have  included  the  ore  smelted 
both  in  the  United  States  and  in  Mexico.  Moreover,  the  latter 
figures  are  for  contents  of  the  ore  purchased,  while  the  census 
figures  are  for  yield  of  the  ore.  However,  the  agreement  is 
sufficiently  close  to  confirm  the  belief  that  my  estimate  is  a  close 
approximation. 

Another  interesting  deduction  may  be  made  from  the  statis- 
tics of  the  smelting  company  for  the  year  ending  April  30,  1903. 
During  that  period,  the  average  price  for  silver  was  50^  cents 
per  ounce;  of  copper,  12.452  cents  per  pound;  of  lead,  4.147  cents 
per  pound.  Computing  ore  of  the  average  grade  shown  for  the 
year  ending  April  30,  1903,  on  the  basis  of  100  per  cent,  of  the 
metal  contents  at  the  average  New  York  prices  for  silver,  lead, 
and  copper,  and  $20.56  per  ounce  for  gold  (which  is  what  the 
United  States  Smelting,  Refining,  and  Mining  Company  realized 
for  its  product  in  1907,  although  the  coinage  value  of  gold  is 
$20.67  per  ounce),  it  appears  that  the  maximum  gross  value  of 
this  average  ore  was  $31.54  per  ton,  itemized  as  follows:  0.41  oz. 
gold  at  $20.56,  $8.4296;  24.95  oz.  silver  at  50£  cents,  $12.5374; 
197.3  Ib.  lead  at  4.147  cents,  $8.1820;  19.17  Ib.  copper  at  12.45 
cents,  $2.3867.  Total,  $31.5357.  Having  already  shown  that 
the  average  profit  per  ton  of  ore  smelted  in  that  period  was  prob- 
ably about  $2,  the  actual  net  profit  to  the  smelter  was  a  little 
more  than  6J  per  cent,  of  the  ore  value. 

Subsequent  Increase  in  Profits.  —  It  is  impossible  to  follow 
analytically  the  subsequent  history  of  the  company  in  any  way 
that  has  a  very  sound  foundation.  The  reports  show  a  marvelous 
increase  in  the  profits,  which  were  $5,421,103  in  1902-03  and 
$9,914,253  in  1906-7.  During  this  period  of  four  years  the  amount 
of  ore  smelted  by  the  company  increased  greatly,  but  there  is 
no  reason  to  surmise  that  it  increased  in  the  same  ratio  as  the 
profits;  indeed,  there  is  sufficient  evidence  to  warrant  me  in 
saying  positively  that  it  did  not,  and  that  if  the  tonnage  of  ore 
smelted  in  each  year  were  made  the  divisor  of  the  net  profits 
reported  the  quotients  would  be  steadily  increasing  up  to  the  last 
year  or  two.  However,  any  such  figuring  would  be  misleading, 


THE  COST  OF  SILVER-LEAD  SMELTING  303 

because  the  company  has  undergone  great  expansion  and  derived 
greatly  increased  profits  from  sources  that  are  not  properly  refer- 
able to  the  direct  smelting  operations.  The  company  avers  that 
it  has  not  increased  treatment  charges,  and  there  is  much  evi- 
dence in  support  of  that  assertion. 

Explanation  of  Increasing  Profits.  —  In  directing  attention  to 
the  subject  of  the  increasing  profit  shown  by  the  reports  of  the 
smelting  company,  it  is  important  to  consider  a  variety  of  con- 
ditions. It  is  well  known  that  it  is  much  more  economical  to 
smelt  on  a  copper  basis  than  on  a  lead  basis.  The  difference  in 
favor  of  the  former  is  fully  $1  per  ton  of  ore.  Consequently,  the 
more  copper  ore  to  be  smelted,  the  more  the  profit,  and  the 
increasing  net  earnings  of  the  smelting  company  are  doubtless 
due  to  some  extent  to  the  increased  amount  of  ore  smelted  on 
the  copper  basis.  It  is  also  well  known  that  the  margin  on  ore 
purchased  in  Mexico  is  much  greater  than  on  American  ores,  and 
a  large  part  of  the  profit  of  the  smelting  company  is  derived  from 
its  Mexican  business,  which  has  been  rapidly  increasing.  The 
lowest  margin,  probably,  is  realized  by  the  smelteries  in  Colo- 
rado, which  until  lately  have  treated  in  the  neighborhood  of 
1,000,000  tons  per  annum  and  operate  rather  uniformly  at  that 
rate.  A  few  years  ago  the  profit  in  smelting  in  Colorado  was 
only  about  $1  per  ton,  and  probably  it  is  no  larger  at  the 
present  time.  It  is  claimed  also  that  the  profit  in  smelting  in 
Utah  has  been  only  about  $1  per  ton  since  competition  has  been 
active  at  that  point.  On  the  other  hand  the  profit  at  non-com- 
petitive points  and  in  Mexico  must  be  large. 

The  increase  in  the  earnings  of  the  smelting  company  has  also 
been  promoted  without  doubt  by  its  profit-sharing  system,  which 
was  designed  to  increase  efficiency  and  has  had  that  effect.  The 
company  has  benefited  from  economies  in  administration,  as  is 
clearly  shown  by  the  decreasing  amount  to  the  account  of  gen- 
eral expense.  Furthermore,  it  has  derived  great  advantage  from 
the  introduction  of  metallurgical  improvements,  such  as  the 
Huntington-Heberlein  process,  and  the  concentration  of  opera- 
tions at  the  most  economical  plants.  Finally,  we  come  to  the 
question  of  metal  stock  account,  wherein  the  purchaser  of  ores 
may  lose  or  make  a  great  deal  through  fluctuation  in  the  value 
of  the  metals.  In  the  long  run  such  fluctuations  are  expected 
to  balance,  and  temporary  gains  or  losses  are  commonly  charged 


304  THE  COST  OF  MINING 

to  an  account  representing  quotational  profit  or  loss.  In  a  long 
upward  trend  of  prices,  a  buyer  of  ores  may  realize  a  great  profit; 
and  similarly  in  a  sharp  decline,  he  may  suffer  an  immense  loss. 
From  1901  to  the  end  of  1907  the  general  trend  of  the  metal 
markets  was  upward,  and  undoubtedly  the  greatest  factor  in 
the  increase  in  net  income  up  to  April  30,  1907,  was  the  appre- 
ciation in  the  value  of  metals  on  its  hands,  just  as  since  June, 
1907,  its  net  income  suffered  severely  from-  the  decline.  The 
company  carries  in  its  statement  of  assets  an  item  of  "  metal 
stock"  ranging  from  $16,418,543  to  $19,415,200,  which  repre- 
sents its  valuation  *of  ores  and  metals  on  hand.  The  nature  of 
its  business  requires  that  large  quantities  of  ore  and  crude  metal 
be  in  stock  at  all  times.  It  appears  from  the  data  deduced  in 
this  article  that  the  stock  necessarily  carried  is  from  20  to  25  per 
cent,  of  the  annual  turnover;  in  other  words,  the  ore  and  its 
products  are  in  process  of  treatment  and  in  transportation  for 
2J  to  3  months. 

Division  of  Ore  Value.  —  Now  let  us  see  what  division  is  made 
of  the  value  of  an  ore  assaying  0.41  oz.  gold,  24.95  oz.  silver, 
179.3  Ib.  lead,  and  19.17  Ib.  copper,  which  was  the  composite  of 
all  the  ore  bought  by  the  American  Smelting  and  Refining  Com- 
pany in  1902-03.  The  smelter  and  refiner  probably  realized,  from 
this  ore  approximately  as  follows:  gold,  0.41  oz.  at  $20.56,  $8.43; 
silver,  24.95  oz.  X  0.97  at  50J  cents,  $12.16;  lead,  197.3  Ib.  X  0.94 
at  4.147  cents,  $7.69;  copper,  19.17  Ib.  X  0.7  at  12.45  cents, 
$1.67.  Total,  $29.95. 

The  expenses  from  the  time  of  receipt  of  the  ore  at  the  smelt- 
ing works  to  the  sale  of  the  refined  metals  are  approximately  as 
follows : 


1.  Smelting,  1  ton  @  $4.50 $4.50 

2.  Converting  40  Ib.  copper  matte  @  0.7  cents 0.28 

3.  Freight  on  190  Ib.  lead  bullion  @  0.43  cents    0.82 

4.  Freight  on  13^  Ib.  copper  bullion  @  0.5  cents   0.07 

5.  Refining  190  Ib.  lead  bullion  @  0.38  cents    0.72 

6.  Refining  13^  Ib.  copper  bullion  @  0.7  cents 0.09 

7.  General  expense  0.40 

8.  Amortization 0.25 

9.  Tie-up  of  metals 0.30 

10.  Metal  account  .  0.30 


Total    .  .    $7.73 


THE  COST  OF  SILVER-LEAD  SMELTING  305 

1.  As  previously  computed.  3.  The  rate  of  0.43  cents  is 
the  mean  of  the  rates  from  Salt  Lake  and  Pueblo ;  this  assumption 
is  necessarily  arbitrary.  4.  In  this  case  also  the  assumption  of 
freight  rate  is  necessarily  arbitrary.  It  is  intended  to  cover  all 
freight  charges  on  copper  from  the  time  of  leaving  the  first 
smelter.  Copper  matte  goes  to  Omaha  from  East  Helena,  Salt 
Lake,  Denver,  Pueblo,  and  elsewhere  —  even  from  Perth  Amboy 
—  and  the  copper  bullion  thence  goes  to  Perth  Amboy.  Probably 
the  assumption  of  0.5  cents  per  pound  to  cover  all  of  this  move- 
ment is  too  low.  7,  8.  These  figures  are  deduced  from  the 
reports  of  the  American  Smelting  and  Refining  Company;  the 
allowance  for  amortization  appears  to  be  too  low.  9.  As  pre- 
viously computed.  10.  This  appears  to  be  the  average  allowance 
that  has  been  made  by  the  American  Smelting  and  Refining 
Company,  as  insurance  against  depreciation  of  metals  on  its 
hands. 

Inasmuch  as  the  smelter  is  supposed  to  realize  a  profit  of  $2 
per  ton  of  ore,  the  total  deduction  for  its  account  must  be  $7.73  + 
$2  =  $9.73,  and  from  the  value  of  the  ore,  $29.95,  there  is  left 
$29.95  —  $9.73  =  $20.22  to  pay  for  the  ore  and  the  freight  upon 
it  to  the  smelting  works. 

Now  let  us  see  how  that  would  figure  out  to  the  producer. 
We  may  assume  a  settlement  on  the  lines  of  the  following:  gold, 
0.41  oz.  at  $19.50,  $8;  silver,  24.95  oz.  X  0.95  X  50i  cents,  $11.91; 
lead,  197.3  Ib.  at  2  cents,  $3.95;  copper,  19.17  Ib.  at  5.45  cents, 
$1.04;  total,  $24.90;  deducting  a  treatment  charge  of  $4.68  leaves 
$20.22  as  the  net  value  to  producer.  This  corresponds  to  an 
ore  contract  reading,  "Gold  to  be  paid  for  at  $19.50  per  oz.;  silver 
at  95  per  cent,  of  the  New  York  quotation;  lead  at  40  cents  per 
unit;  copper  at  the  New  York  quotation,  less  7  cents  per  pound; 
treatment  charge,  $4.68  per  ton;  neutral  basis;  delivery  at  smel- 
ter's works."  This  has  a  familiar  sound,  except  that  so  small 
a  percentage  of  copper  is  not  always  paid  for,  but  it  must  be 
remembered  that  I  am  here  figuring  on  a  composite  ore,  the 
copper  of  which  is  obtained  chiefly  in  special  classes  of  a  higher 
average  of  all  ores  smelted. 

Conclusions.  —  After  a  consideration  of  the  data,  it  is  impos- 
sible to  escape  the  conclusion  that  the  great  increase  in  the 
net  earnings  of  the  American  Smelting  and  Refining  Company 
from  year  to  year  is  to  be  attributed  to:  1.  Enlargement  in  the 


306  THE  COST  OF  MINING 

volume  of  business.  2.  Institution  of  economies  (a)  in  admin- 
istration; (6)  through  centralization  of  operations;  (c)  through 
metallurgical  improvements;  (d)  through  increase  in  operative 
efficiency.  3.  Appreciation  in  the  value  of  metals,  due  partly 
to  natural  causes,  and  partly  to  manipulations  by  the  company. 
The  profits  on  exempt  lead,  and  on  contracts  with  the  producers 
of  lead  ore,  whereby  the  value  in  excess  of  a  certain  price  per 
pound  is  divided  between  the  producer  and  the  smelting  com- 
pany, must  contribute  largely  to  the  treasury  of  the  company. 
Since  the  middle  of  1907  the  depreciation  in  the  value  of  metals 
has  offset  some  of  the  gain  previously  realized.  4.  Increase  in 
the  amount  of  ore  smelted  on  the  copper  basis,  which  is  more 
profitable  than  the  lead  basis.  5.  Increase  in  earnings  of  sub- 
sidiary companies,  such  as  the  steamship  company.  6.  Earn- 
ings from  investments  of  surplus,  e.g.,  the  preferred  stock  of  the 
American  Smelters  Securities  Company.  7.  Profits  from  invest- 
ments, e.g.,  the  sale  of  a  portion  of  its  holding  of  the  stock  of  the 
United  Lead  Company,  carried  into  earnings  for  the  year  ending 
April  30,  1907. 

The  position  of  the  smelting  company  being  so  strong  in  many 
respects,  and  the  surplus  which  it  carries  being  so  large,  the  com- 
pany may  be  forgiven  for  not  writing  off  anything  for  amortiza- 
tion of  its  plants.  As  I  have  previously  pointed  out,  the  outlay 
made  on  account  of  extraordinary  improvements  is  of  the  nature 
of  an  amortization  account,  but  the  amount  expended  so  far  in 
this  way  is  of  doubtful  sufficiency.  The  smelteries  and  refin- 
eries now  owned  by  the  company  must  be  worth  in  the  neigh- 
borhood of  $15,000,000,  i.e.,  it  would  cost  that  amount  to 
replace  them.  The  average  amount  expended  for  extraordinary 
improvements  during  the  five  years  ending  with  April  30,  1907, 
was  a  little  less  than  $750,000  per  annum,  which  is  only  5  per 
cent,  of  the  physical  value  of  the  plants.  This,  it  seems  to  me, 
is  an  insufficient  allowance  for  amortization. 

According  to  the  statement  filed  by  the  company  in  the  New 
York  Stock  Exchange,  in  January,  1909,  its  smelteries  and  refin- 
eries were  the  following: 


THE  COST  OF  SILVER-LEAD  SMELTING 


307 


SMELTERIES 


Place 

Plant 

Furnaces 

Annual  Capacity 

Denv6r  Colo 

Globe 

7 

322,000 

Pueblo  Colo 

Pueblo  

7 

328,000 

Pueblo  Colo 

Eilers                        .    .  . 

6 

295,000 

Durango  Colo 

Durango 

4 

146,000 

Leadville  Colo              .      .  . 

Arkansas  Valley  

10 

509,000 

Salt  Lake  Utah 

Murray                   

8 

523,000 

East  Helena  Mont 

East  Helena 

4 

235,000 

Omaha,  Neb  

Omaha  

2 

82,000 

Chicago,  111  
Maurer  N   J 

National  
Perth  Amboy 

2 
3 

60,000 
140,000 

El  Paso  Tex 

El  Paso 

10 

492  000 

Monterey,  Mex  
Aguascalientes,  Mex  
Chihuahua,  Mex    

Monterey  
Aguascalientes    
Chihuahua  

10 
10 
3 

460,000 
720,000 
153,000 

86 

4,465,000 

REFINERIES 


Place 

Plant 

Lead 
Tons 

Copper 
Tons 

Gold  and  Silver 
Oz. 

Omaha  

Omaha  

156,000 

36,000 

Chicago    

National  

84,000 

16  400  000 

Maurer  

Perth  Amboy   .  .  . 

66,000 

66,000 

36,000,000 

The  annual  product  of  the  refineries  is  about  as  follows: 
gold,  1,250,000  oz.;  silver,  66,000,000  oz.;  lead,  225,000  tons; 
copper,  66,000  tons. 


CHAPTER  XVII 


ZINC   MINING 

Statistics  of  spelter  production  —  Southwest  Missouri  —  Geology  of  Joplin 
district  —  Exploration  —  Mining  methods  —  Milling  methods  —  Losses 
in  mining  and  realization  —  Cost  statements  —  Wisconsin  zinc  mining  — 
Generalized  statements  of  cost  of  producing  spelter  from  ores  of  Wiscon- 
sin, Leadville,  and  Joplin. 

ZINC  MINING 

THE  following  tables  show  the  production  of  the  United  States 
and  of  the  world.  It  is  to  be  observed  that  Table  No.  1  showing 
the  production  of  spelter  (which  is  simply  the  trade  name  for 
metallic  zinc)  gives  the  output  of  the  States  where  smelting  is 
done  rather  than  where  the  ore  is  mined.  This  conveys  to  a  cer- 
tain extent  a  false  impression.  As  a  matter  of  fact,  the  principal 
production  of  zinc  ores  is  obtained  from  Missouri,  Wisconsin, 
Colorado,  and  New  Jersey:  (For  tables  see  pages  309  and  310.) 

SHIPMENTS  OF  ORE  FROM  THE  JOPLIN  DISTRICT 
(IN  TONS  OF  2000  LB.) 


Year 

Zinc  Ore 

Lead  Ore 

Year 

Zinc  Ore 

Lead  Ore 

1895  

144,487 

31,294 

1902  

262,545 

31,625 

1896 

155  333 

27  721 

1903   .   ... 

234,873 

28,656 

1897 

177  976 

30  105 

1904 

267  240 

34,362 

1898  

234  455 

26  687 

1905  

252,435 

31,679 

1899 

255  088 

23  888 

1906 

278  930 

39,189 

1900  
1901  . 

248,446 
258  306 

29,132 
35  177 

1907  
1908 

286,589 
259,609 

41,742 
38,532 

PRODUCTION  OF  ZINC  IN  NEW  SOUTH  WALES 
(IN  TONS  OF  2240  LB.) 


1903 

1904 

1905 

1906 

1907 

1908 

Spelter  .... 

286 

299 

544 

1,008 

984 

1,065 

Zinc  in  ore  exported  .... 

14,625 

22,318 

30,637 

33,427 

76,645 

113,853 

308 


ZINC  MINING 


309 


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THE  COST  OF  MINING 


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ZINC  MINING  311 

ZINC  MINING  STATEMENTS 

I  have  not  been  able  to  secure  any  statements  by  zinc-mining 
companies  showing  the  same  outline  of  the  business  that  can  be 
secured  in  the  case  of  most  other  mining  enterprises.  Through  a 
certain  familiarity  with  the  business,  however,  I  am  able  to  sup- 
ply a  perspective  of  results  in  some  of  the  more  important  fields 
in  the  following  sketches  of  zinc-mining  operations  of  Joplin  and 
of  Wisconsin.  At  the  end  of  the  chapter  will  be  found  some 
generalized  statements  of  the  cost  of  mining  ores  of  certain 
assumed  grades  in  these  districts  and  in  Leadville,  Colorado.  As 
a  matter  of  fact  there  is  no  such  thing  as  a  complete  zinc-mining 
business  in  the  United  States  outside  the  operations  of  the  New 
Jersey  Zinc  Company,  which  is  apparently  one  of  the  most  secre- 
tive of  all  corporations.  The  product  in  general  is  obtained 
through  the  combined,  but  more  or  less  disjointed,  efforts  of 
leasers  and  custom  smelters. 

THE  SOUTHWEST  MISSOURI  ZINC  DISTRICT 

This  district  produces  60  per  cent,  of  the  spelter  of  the  United 
States,  and,  therefore,  bears  nearly  the  same  relation  to  the  zinc 
business  as  Lake  Superior  mines  bear  to  the  iron  business  of  the 
country.  Perhaps  no  other  district  of  equal  importance  is  so 
little  understood  by  outside  mining  people. 

The  Joplin  field  is  a  very  extensive  one,  more  or  less  ore 
having  been  mined  over  an  area  of  perhaps  2000  sq.  m.,  but 
within  this  extensive  field  by  far  the  greater  part  of  the  produc- 
tion has  come  from  three  or  four  localities.  Of  these  the  most 
important  may  be  called  the  Webb  City  zone,  wliich  is  said  to 
have  produced  about  one-half  of  the  entire  output  of  the  field. 
In  the  immediate  vicinity  of  the  city  of  Joplin,  there  are  very 
extensive  mineralized  zones  extending  in  a  northwest  and  south- 
east direction.  A  third  place  that  has  produced  extensively  is  in 
the  neighborhood  of  Galena,  Kansas.  I  shall  attempt  a  general 
description  of  these  orebodies  by  using  as  an  example  the  great 
Webb  City  zone. 

This  productive  area  extends  from  Oronogo  on  the  northwest 
to  Porto  Rico  and  Duenweg  on  the  southeast,  a  distance  of  ten 
miles.  For  this  distance  the  average  width  of  the  zone  is  perhaps 
three-quarters  of  a  mile,  though  it  widens  at  one  or  two  places 


312  THE  COST  OF  MINING 

• 

to  a  mile  and  a  half  and  narrows  at  other  places  to  a  quarter  of 
a  mile.  In  a  rough  way,  I  estimate  the  productive  ground  at 
4800  acres.  It  would  not  be  inaccurate  to  describe  this  entire 
tract  as  a  continuous  orebody,  although  it  shows  great  irregular- 
ities. The  total  production  of  this  zone  has  been  approximately 
3,000,000  tons  of  zinc  and  lead  ore,  derived  from  mining  and 
milling  75,000,000  tons  of  rock.  The  value  actually  realized 
has  been  about  $90,000,000,  but  at  present  prices  the  amount 
would  be  much  greater.  The  production  of  the  zone  for  1907 
was  109,229  tons  zinc  ore  worth  $5,000,000,  and  24,336  tons 
lead  ore  worth  $1,700,000,  approximately,  making  a  total  value 
on  the  ground  of  $6,700,000.  The  spelter  realized  from  this 
production  may  be  estimated  at  55,000  tons,  worth  in  St.  Louis 
$6,390,000.  The  pig  lead  realized  may  be  estimated  at  19,000 
tons,  worth  in  St.  Louis  $1,985.000.  The  average  price  of  spelter 
was  5.812  cents  at  St.  Louis,  and  of  lead  5.225  cents.  On  these 
prices  the  average  yield  to  the  miner  was  $45.23  for  zinc  ore  and 
$68.73  for  lead  ore. 

GEOLOGY  OF  THE  JOPLIN  DISTKICT  AT  LARGE 

The  rocks  in  which  the  ore  occurs  constitute  a  flat-lying 
formation  of  chert  and  limestone  about  250  ft.  thick.  At  the 
bottom  of  the  formation  is  a  persistent  bed  of  flint  about  20  ft. 
thick,  called  the  Grand  Falls  chert.  Above  this  is  limestone 
containing  many  layers  and  nodules  of  flint.  Originally  this 
cherty  limestone  formation  was  all  covered  by  a  stratum  of  black 
shale,  which  occasionally  contains  a  little  coal.  The  greater 
part  of  this  shale  has  been  removed  by  erosion,  but  certain  portions 
of  it  still  remain  in  the  form  of  long  strips  filling  trough-like  depres- 
sions in  the  underlying  limestone. 

The  orebodies  of  the  region  are  all  contiguous  to  these  areas 
of  depressed  shale,  occurring  either  under  or  along  the  sides  of 
the  shale  troughs.  These  troughs  of  shale  are  called,  by  the 
way,  "soapstone  bars.77  The  explanation  which  I  believe  to 
be  the  true  one  of  the  occurrence,  both  of  the  shale  troughs  and 
of  the  ore,  is  as  follows: 

The  limestone,  along  certain  lines  (of  an  origin  not  at  present 
explicable),  was  dissolved  out  while  the  shale  formation  still 
overlaid  the  entire  region.  The  caverns  formed  by  this  dissolu- 
tion finally  became  so  large  that  they  caved  in,  allowing  the  over- 


ZINC  MINING  313 

lying  shale  to  settle  down  into  the  pits  thus  formed  to  a  depth 
of  from  a  few  feet  to  as  much  as  150  ft.  below  the  surface  of  the 
cherty  limestone  formation.  The  dissolution  of  the  limestone  did 
not  affect  the  chert  beds.  These  were  broken  up  during  the  sub- 
sidence caused  by  the  disappearance  of  the  lime.  The  result  was 
that  underneath  and  along  the  sides  of  the  shale  filling  of  the 
troughs  there  were  great  quantities  of  broken  flint  mixed  with 
mud  derived  from  the  soft  overlying  shale.  There  were  also 
masses  of  limestone,  of  all  sizes,  remaining  on  the  sides  and  even 
in  the  bottom  of  the  troughs.  The  limestone  remnants  increase 
in  quantity  as  you  go  from  the  center  of  the  trough  until  finally 
you  reach  the  solid  unaffected  masses. 

Ore  has  been  deposited  in  the  brecciated,  or  disturbed  mass 
of  flint  and  limestone  boulders  and  clay  occupying  the  space 
between  the  depressed  shale  in  the  center  of  the  trough  and  the 
unaltered  formation  at  its  bottom  and  sides.  The  ore  was 
brought  in  by  surface  waters.  Naturally  the  deposition  of  ore 
was  not  uniform.  It  is  supposed  that  the  organic  matter  in  the 
shale  was  the  precipitating  agent  which  caused  the  deposition  of 
zinc  and  lead  sulphates  picked  up  by  the  surface  waters  during 
the  process  of  the  erosion  of  the  Ozark  plateau  to  the  southeast. 
At  any  rate  the  ore  is  found  in  exceedingly  irregular  bodies  in  the 
broken  ground  along  the  troughs  of  shale,  or  "soapstone  bars." 

Naturally,  channels  of  dissolution  such  as  those  described 
as  causing  the  troughs  would  be  of  varying  extent  and  depth. 
This  is  the  case.  In  some  of  the  larger  channels  the  limestone 
has  been  removed  quite  to  the  bottom  of  the  cherty  limestone 
formation  and  the  broken  ground  extends  down  to  the  basal 
member  —  the  Grand  Falls  chert.  This  chert  is  a  brittle  stra- 
tum of  flint  containing  innumerable  crevices  so  that  it  serves  as  a 
ready  channel  for  the  circulation  of  water.  On  this  account 
much  ore  has  been  deposited  in  it.  It  is  called  the  "sheet 
ground."  This  sheet-ground  ore,  while  of  exactly  the  same 
composition  and  origin  as  the  other  ore,  is  distinguished  from  it 
notably  in  several  respects.  Instead  of  being  in  a  mass  of  broken 
ground  along  the  "  soapstone  bars "  it  occurs  under  the  solid 
original  limestone  masses.  Instead  of  being  in  a  shapeless 
irregular  mass,  it  forms  a  regular  flat  bed,  like  a  seam  of  coal. 
Laterally,  its  extent  is  variable,  as  also  is  its  richness,  but  the 
mineralization  is  pretty  uniform  over  extensive  areas,  often  as 


314  THE  COST  OF  MINING 

much  as  2000  ft.  wide.  It  must  never  be  forgotten,  however, 
that  the  sheet  ground  is  always  attached  to  the  loci  of  mineral- 
ization —  the  "soapstone  bars.77  It  forms  extensive  shoots  under 
the  limestone  bordering  the  deepest  and  most  strongly  mineralized 
bars  or  channels.  It  often  extends  1000  ft.  from  a  bar,  very 
rarely  over  2000  ft. 

Practically  all  of  the  successful  sheet-ground  mining  to  date 
has  been  confined  to  the  great  Webb  City  ore-channel,  between 
Oronogo  and  Porto  Rico.  It  is  generally  believed  that  the 
sheet  ground  yields  about  3  per  cent,  of  the  rock  mined  in  zinc 
or  lead  ore.  The  zinc  ore  obtained  averages  not  far  from  60 
per  cent,  zinc;  the  lead  ore  about  80  per  cent.  lead.  The  ore  is 
obtained  by  crushing  and  washing  in  concentrating  mills,  which 
save  about  60  per  cent,  of  the  zinc  and  90  per  cent,  of  the  lead 
actually  contained  in  the  rock.  The  total  saving  approximates 

66f  per  cent. 

EXPLORATION 

Practically  the  only  method  now  employed  in  searching  for 
ore  is  churn  filling.  The  irregular  deposits  along  the  soapstone 
bars  are  apt  to  be  quite  narrow.  The  vertical  extent  is  often 
greater  than  the  width.  Consequently,  in  looking  for  such  ore- 
bodies  it  is  necessary  to  drill  holes  pretty  close  together.  An 
experienced  driller  can  form  a  good  idea  from  the  kind  of  ground 
he  encounters  of  what  the  chances  are  of  finding  ore.  If  he  finds 
a  little  ore  and  open  ground,  that  is,  broken  rudely  stratified 
material,  he  will  place  his  following  holes  not  over  50  ft.  from 
the  first  until  he  discovers  pay  ore.  Then  he  will  endeavor  to 
follow  the  ore  by  drilling  along  the 'course  of  the  bar.  Where 
the  bars  are  small  and  irregular,  it  is  often  necessary  to  drill  as 
many  as  three  or  four  holes  to  the  acre  to  explore  a  tract  thor- 
oughly. Since  the  drilling  costs  an  average  of  80  to  90  cents  per 
foot,  and  the  holes  will  average  about  175  ft.  deep,  we  may  place 
the  cost  of  exploring  such  a  tract  roughly  at  $500  per  acre. 

In  the  sheet  ground  no  such  amount  of  drilling  is  necessary. 
On  account  of  the  much  greater  uniformity  of  the  deposits  it  is 
often  possible  to  explore  the  ground  satisfactorily  with  only  one 
hole  to  every  two  acres.  Holes  to  explore  this  ground  are  drilled 
more  than  200  ft.  and  the  cost  per  hole  will  approximate  $200. 
The  actual  cost  per  acre  for  exploring  this  ground  is  probably 
less  than  $100,  but  I  think  it  should  properly  be  about  $200. 


ZINC  MINING  315 

It  is  the  almost  universal  custom  to  appraise  the  value  of  the 
ore  only  by  the  eye.  The  cuttings  from  the  drill  come  out  in  the 
form  of  coarse  angular  sand  which  the  driller  washes  in  a  bucket 
of  water,  and  simply  forms  a  judgment  as  to  whether  the  sand 
contains  pay  ores  or  not.  If  the  cuttings  show  only  small  amounts 
of  ore,  not  enough  in  his  judgment  to  pay  for  mining,  he  records 
"a  few  shines  of  jack  or  lead."  If  he  thinks  the  ground  doubtful 
he  writes  —  " shines"  or  "good  lead,"  or  both. 

MINING  METHODS 

The  mining  of  this  ore  will  be  readily  understood  from  the 
above  description  of  its  occurrence.  Owing  to  the  shallowness 
of  the  deposits  there  is  no  occasion  whatever  for  large  expensive 
shafts.  As  the  extreme  depth  is  only  250  ft.,  and  the  average 
depth  in  mining  perhaps  less  than  175  ft.,  it  is  evident  that  a 
single-compartment  shaft,  except  in  the  unusual  contingency  of 
encountering  a  very  large  amount  of  water,  can  be  sunk  very 
cheaply.  It  is  probable  that  the  average  shaft  of  the  Joplin  dis- 
trict does  not  cost  more  than  $4000.  Hence  it  is  cheaper  to  open 
up  the  ground  by  numerous  shafts  rather  than  by  extensive 
openings  underground.  It  will  also  be  evident  that  aside  from 
the  question  of  first  cost  the  tramming  of  ore  is  cheaper  on  the 
surface  than  underground. 

The  effect  of  these  considerations  is  that  the  accepted  method 
of  operating  in  the  district  is  to  have  one  mill  supplied  with 
ore  from  several  shafts,  the  ore  being  transported  to  the  mill  by 
inclined  tramways. 

The  hoisting  methods  of  the  district  are  unique  and,  consider- 
ing the  conditions,  exceedingly  satisfactory.  The  ore  is  shoveled 
into  buckets  locally  called  "  cans "  which  hold  about  800  Ib.  each. 
These  cans  are  placed  upon  small  trucks  underground  and  run 
to  the  shafts,  where  they  are  attached  to  the  hoisting  rope  by  a 
man  called  the  "  tub-hooker."  The  hoist  is  placed  in  a  derrick 
or  headframe  vertically  above  the  shaft,  the  rope  passing  over 
the  sheave  a  few  feet  above  the  engine.  The  hoist  man  pulls 
the  bucket  up  so  that  the  bottom  of  it  is  slightly  above  his  head. 
He  then  attaches  to  the  bottom  of  the  bucket  a  hook  which,  when 
the  bucket  is  again  lowered,  dumps  it  into  a  bin.  To  do  this, 
hoist  his  empty  bucket  back  to  position,  detach  the  hook,  and 
lower  again,  is  in  the  hands  of  an  expert  hoistman,  a  matter  of 


316  THE  COST  OF  MINING 

only  a  couple  of  seconds.  In  this  manner  it  is  possible  to  average 
400  cans  per  shift,  or  160  tons.  Only  two  men  are  employed, 
whose  combined  wages  are  approximately  $5  per  day.  The  hoist 
itself  costs  $250.  The  derrick  in  which  the  hoisting  is  done, 
together  with  the  bin  ore,  costs  $600  more.  It  is  evident  that  this 
method  of  operating,  while  having  the  appearance  of  crudity,  is 
exceedingly  effective  and  cheap.  The  actual  cost  is  probably  not 
over  5  cents  per  ton  hoisted. 

The  mining  underground  involves  the  usual  requirements  of 
selecting  the  ground  so  as  to  mine  out  the  best  of  the  ore  without 
leaving  too  much  in  the  pillars  and  without  making  the  open- 
ings too  dangerous.  In  the  "  upper  ground "  irregular  deposits 
this  selection  opens  the  field  for  the  exercise  of  skill.  In  the 
sheet-ground  deposits  the  work  is  far  more  regular  and  certain. 
As  a  general  statement,  the  advantages  of  the  upper  deposits  in 
the  way  of  richer  ores  and  softer  ground  are  nearly-,  if  not  quite, 
counterbalanced  in  favor  of  the  sheet  ground  by  the  greater  uni- 
formity and  persistence  of  the  latter.  There  is  really  very  little 
difference  in  the  methods  employed  in  the  two  kinds  of  mines. 
In  the  upper  ground  the  ore  is  taken  from  large  irregular  cham- 
bers and  in  the  sheet  ground  from  flat  deposits  from  8  to  20  ft. 
thick  that  are  as  regular  over  considerable  areas  as  a  seam  of 
coal.  The  only  differences  in  mining  between  the  two  kinds  of 
mines  are  of  an  unimportant  nature  which  will  be  readily  under- 
stood, from  the  above  description,  and  need  not  be  explained. 

MILLING  METHODS 

The  visitor  from  outside  districts  is  apt  to  be  very  much  sur- 
prised at  the  crudity  of  the  milling  methods  employed,  and  many 
an  engineer  has  discovered  what  he  believed  to  be  a  field  for 
vast  improvement  by  introducing  better  methods.  Thus  far 
nothing  whatever  has  come  of  such  attempts.  They  have 
usually  been  based  upon  some  radical  misapprehension  of  the 
conditions. 

The  Joplin  mills  confessedly  only  extract  about  60  per  cent, 
of  the  zinc  ore.  The  proportion  varies  greatly  at  different  mines. 
The  variation,  however,  is  not  generally  due  to  the  mill  practice, 
but  to  the  character  of  the  ore.  The  mills  are  suited  to  save  only 
the  free  ore  which  can  be  easily  separated  from  the  gangue  by 
rather  coarse  crushing.  The  remaining  zinc  which  is  enclosed  in 


ZINC  MINING  317 

small  particles  in  a  secondary  growth  of  flint  cannot  be  saved 
except  by  much  finer  grinding  and  much  more  expensive  methods 
for  which  the  resulting  ore  extracted  will  not  pay. 

The  ordinary  mill  consists  of  no  more  than  three  large  Cooley 
jigs  supplemented  by  one  or  two  Wilfley  tables.  The  Cooley 
jigs  are  of  the  Harz  type,  but  contain  usually  from  five  to  seven 
cells.  The  ore  after  being  reduced  to  about  one-half  inch  is 
next  passed  to  the  rougher  jig,  which  catches  some  of  the  coarse 
lead  and  makes  a  rough  concentration  of  the  zinc  ore.  This  is 
drawn  as  a  middling  product  from  the  rougher  and,  after  being 
passed  over  a  second  pair  of  rolls,  goes  to  a  second  jig  called  the 
"  cleaner."  The  tailings  from  the  cleaner  jig  are  sometimes 
passed  over  a  third  or  smaller  jig  for  further  treatment  and  a  cer- 
tain proportion  of  finer  material  is  settled  out  for  treatment  in 
one  or  two  Wilfley  tables.  The  ordinary  mill  costs  from  $10,000 
to  $20,000  and  has  a  capacity  of  about  15  tons  an  hour.  The 
largest  mills  in  the  district  have  cost  about  $50,000  and  have  a 
capacity  of  35  tons  an  hour. 

LOSSES  IN  MINING 

It  must  be  remembered  that  the  mining  of  zinc  ore  was  first 
begun  as  an  incident  to  lead  mining,  which  was  done  at  or  near 
the  surface.  At  first  the  zinc  ore  was  sold  usually  at  very  low 
prices.  It  was  cleaned  on  hand  jigs,  but  later  cheap  and  crude 
mills  were  built. 

As  the  lead  was  found  in  small  irregular  patches,  at  or  near 
the  surface,  there  was  no  inducement  to  mine  it  on  a  large  scale. 
One  or  two  miners  would  work  at  it  and  pay  royalties  to  the 
farmers  who  owned  the  land.  Since  two  men  could  not  work 
much  land,  there  was  no  demand  for  leases  of  more  than  a  very 
few  acres.  As  lead  mining  gradually  changed  into  zinc  mining 
the  small  leases  continued  and  the  small  mills  were  only  expected 
to  handle  the  richest  pockets  of  "  jack."  In  this  way  the  business 
has  built  itself  up  in  ever-increasing  volume  as  a  multitude  of 
small  leases.  The  system  has  all  the  faults  that  might  be 
expected  of  it,  but  it  was  the  one  which  the  circumstances 
demanded.  That  it  is  attended  by  frightful  losses  will  appear 
from  the  following  summary  of  operating  results. 

Take  100  tons  of  ore  containing  5  per  cent,  metallic  zinc  in 
the  ground,  we  have  the  following  approximate  statement: 


318  THE  COST  OF  MINING 

COSTS  AND  LOSSES  ON  ZINC  ORE 

Costs.         Losses.        Total. 

Spelter  value  100  tons  5  per  cent. 

ore  at  5  cents,  St.  Louis $500.00 

Loss  in  mining,  10  per  cent $50.00 

Mining,  90  tons  at  $1.05 $94.50     

Loss  in  milling,  40  per  cent 180.00     

Milling  70  tons  at  $0.25    22.50     

Loss  in  smelting,  12  per  cent 35.10     

Smelting  and  amortization 54.00     

Transportation     9.15      

Total    $180.65    $205.10   $345.75 

Approximate  profit $54.25 

This  shows  a  recovery  by  mining  of  $450;  by  milling  of  $270; 
by  smelting  of  $234.90.  The  approximate  costs  are  36.1  per  cent, 
of  the  total  value;  the  losses,  53  per  cent.;  the  profit,  10.9  per 
cent.  The  profit  on  recovered  value  is  23  per  cent.,  and  this 
profit  is  divided  as  follows:  Smelter,  $14.25,  or  26  per  cent.;  roy- 
alty, 15  per  cent.,  $23.60,  or  43  per  cent.;  mines,  $17.15,  or  31 
per  cent,  of  the  total  profit. 

JOPLIN  COST  STATEMENTS 

The  cost  statements  of  the  Joplin  districts  are  open  to  a  good 
deal  of  uncertainty,  on  account  of  the  lack  of  accurate  informa- 
tion concerning  the  tonnage  handled.  The  accompanying  state- 
ment of  the  Grace  Zinc  Company  illustrates  the  point.  The 
cans  hoisted  refers  in  the  local  vocabulary  to  buckets,  the  greater 
portion  of  which  are  assumed  to  hold  1000  Ib.  As  a  matter  of 
fact,  it  is  known  that  they  do  not;  some  operators  estimate  that 
they  hold  900  and  others  800  Ib.  On  either  of  these  two  assump- 
tions the  tonnage  would  be  much  greater  than  that  taken  as  the 
basis  for  the  cost  statement.  This  tonnage  estimate  is  based  on 
the  tonnage  content  of  cars  holding  from  1J  to  2^  tons  in  which 
the  ore  is  hoisted  to  the  mill.  A  considerable  amount  is  rejected 
as  waste.  If  we  were  to  assume  that  the  cans  contained  800  Ib. 
each,  our  tonnage  would  be  156,000  and  the  costs,  instead  of 
totaling  $1.41,  would  be  reduced  to  $1.10.  If  the  cans  were 
estimated  at  900  Ib.  each,  the  tonnage  estimate  would  be  almost 
180,000,  and  the  cost  would  fall  to  95  cents.  The  low  grade  of 
ore,  and  particularly  the  method  of  leasing  and  mining  which 
has  been  adopted,  prevent  the  installation  of  devices  by  which  a 
more  accurate  measure  could  be  taken  of  the  tonnage. 


ZINC  MINING 


319 


GRACE  ZINC  COMPANY 
PRODUCTION  AND  COST  STATEMENT  APRIL  1,  1905,  TO  JAN.  1,  1908 

Cans  hoisted 390,346 

Tons  dirt  milled     121,291 

Tons  mixed  ore  recovered    5,307 

Per  Ton 

Per  Ton  Concen- 
Dirt.         trates. 

Breaking  ore $0.40     $9.03  $47,939.43 

Tramming     0.21        4.85  25,722.82 

Hoisting 0.15        3.32  17,616.19 

Pumping 0.10       2.27  12,050.81 

Exploring    0.09        2.10  11,160.39 

Timbering 0.09  452.18 

Milling 0.23       5.33  28,304.19 

General  Expense      0.15       3.56  18,870.34 

Construction     0.08        1.74  9,248.40 

Total    $1.41    $32.29  $171,364.75 

Royalty  paid    $38,957.55 

Net  value  of  ore $221,230.21 

Total  expense     171,364.75 

Net  profit    $49,865.46 

A  more  accurate  statement  of  costs  is  based  on  the  tonnage 
of  concentrates  produced.  The  amount  of  these  is,  of  course, 
accurately  determined.  It  is  probable  that  the  figures  given  in 
the  accompanying  statement  give  a  fair  idea  of  average  costs 
for  mining  and  milling  in  the  Joplin  district. 

I  have  not  made  an  estimate  of  the  amortization  charge, 
which  should  be  made  against  such  a  plant  as  that  from  which 
the  cost  statement  is  taken.  The  actual  cost  of  such  a  plant 
outside  of  the  amounts  covered  by  construction  and  exploring 
is  probably  not  over  $20,000.  All  renewals  are  covered  in  oper- 
ating expense.  Construction  probably  more  than  takes  care  of 
the  plant  itself.  It  is  probable  that  a  sum  of  $3000  a  year  in 
addition  to  the  costs  given  would  be  an  ample  return  on  the  actual 
plant  investment.  This  would  amount  in  the  table  to  less  than 
$8000,  and  would  increase  the  total  costs  per  ton  of  dirt  to  $1.49, 
and  per  ton  of  concentrates  to  $34. 

Assuming  the  last  figure  to  represent  the  complete  mining 
and  milling  cost,  and  that  a  concentrate  containing  60  per  cent, 
zinc  is  smelted  at  a  cost  of  $14  a  ton,  with  a  loss  of  12  per  cent., 
we  find  that  1056  Ib.  of  spelter  costs  $48,  or  4.54  cents  per  pound. 
While  it  is  undoubtedly  true  that  some  mines  at  all  times,  and 


320  THE   COST   OF   MINING 

most  mines  for  short  periods,   can  produce  spelter  cheaper,   I 
believe  that  the  above  figure  is  a  fair  average. 

ZINC  MINING  IN  WISCONSIN 

Wisconsin  has  been  within  the  last  few  years  second  in  the 
production  of  zinc  in  the  United  States.  Its  future  is  thought 
by  many  to  be  exceedingly  promising,  but  I  must  confess  to  some 
doubts  as  to  the  ability  of  the  district  to  maintain  a  large  output 
for  many  years  in  succession.  The  district  is  in  the  extreme 
southwestern  corner  of  the  State. 

The  zinc  ores  are  associated  with  iron  in  the  form  of  marcasites, 
usually  in  almost  equal  quantities.  It  is  impossible  by  ordinary 
methods  of  water  concentration  to  separate  this  iron  from  the 
zinc.  The  separation  must  be  accomplished  electrically  either 
by  magnetic  attraction  or  by  static  repulsion.  The  magnetic 
separators  are  cheap  installations  costing  about  $10,000  each  for 
a  capacity  of  some  twenty  tons  of  concentrates  daily.  The  pro- 
cess consists  of  a  very  light  roast  which  partially  oxidizes  and 
magnetizes  the  marcasite  so  that  by  passing  the  ore  thus  roasted 
by  a  group  of  magnets,  the  iron  is  taken  out.  This  is  the  usual 
method  employed  in  the  district. 

With  the  exception  of  the  association  of  zinc  with  the  iron 
there  is  no  radical  difference  between  the  problem  of  mining  in 
Wisconsin  and  in  Missouri,  except  that  the  orcbodies  have  certain 
different  characteristics  which  I  shall  presently  explain.  The 
mining  and  milling  can  be  done  in  approximately  the  same  way, 
although  the  costs  in  Wisconsin  seem  to  average  some  20  per 
cent,  higher  than  in  Missouri. 

The  Wisconsin  orebodies  fill  partial  openings  in  the  limestone 
made  by  the  subsidence  of  large  prism-like  masses  in  the  bottom 
portion  of  the  limestone.  The  limestone  stratum  in  which  the 
ore  occurs  is  about  150  ft.  thick,  and  is  underlaid  by  a  persistent 
bed  of  clay  shale.  It  looks  as  if  the  limestone  might  have  been 
dissolved  out  for  a  foot  or  two  above  the  shale  along  certain 
channels  to  such  an  extent  that  finally  a  large  irregular  prism  of 
limestone  detached  itself  from  the  solid  mass  and  fell  down  a 
distance  of  perhaps  two  feet.  The  result  of  this  subsidence  being 
that  the  interior  of  the  prism  is  cracked  up  to  a  certain  extent 
and  certain  openings  are  made  along  the  top  and  sides.  These 
openings  have  served  for  the  deposition  of  the  ores. 


ZINC   MINING  321 

The  openings  thus  formed  in  the  cross-section  have  the  shape 
of  a  rude  arch,  usually  quite  flat  at  the  top,  and  breaking  down 
in  irregular  steps  along  the  sides.  In  the  local  phraseology,  the 
ores  deposited  in  the  level  at  the  top  of  the  arch  are  called  "  flats," 
and  those  occurring  along  the  sides  are  called  "pitches."  The 
slightly  disturbed  broken  up  interior  of  the  prism  is  called  the 
"core." 

These  orebodies  have  precisely  the  irregularities  that  one  would 
expect  from  such  an  explanation  of  their  origin.  In  some  places 
the  dissolution  of  the  lime,  or  whatever  it  was  that  caused  the 
subsidence,  was  more  extensive  than  at  other  places;  so  that  the 
prisms  are  both  wider  and  higher  in  some  places  than  in  others. 
The  high  places  take  the  shape  of  long  elliptical  cones.  That  is 
to  say,  that  the  roof  slopes  down  both  longitudinally  and  in  cross- 
sections.  In  some  cases  these  prismatic  orebodies  have  been 
proved  to  have  considerable  persistence  in  length..  The  Empire 
and  Enterprise  mines  have  been  worked  on  one  run  of  ore  for  a 
total  length  of  about  half  a.  mile,  the  greatest  width  being  about 
120  ft. 

It  remains  to  say  that  the  mineralization  of  the  prisms  is 
irregular.  Ore  sometimes  is  found  on  both  sides  of  the  arch,  but 
is  generally  of  pay  quality  on  one  side  only. 

These  orebodies  seem  to  have  an  ordinary  course  of  about 
N.  70°  E.,  but  sometimes  they  make  an  abrupt  turn,  and  in  one 
well-authenticated  case  the  ore  turned  at  right  angles  to  its 
ordinary  course,  and  ran  for  350  ft.  in  a  course  of  N.  20°  W. 

It  is  believed  locally  in  Wisconsin  that  the  runs  of  zinc  ore 
will  be  found  to  be  exceedingly  persistent,  not  always  following 
the  same  direction,  but  making  occasional  turns  and  then  resum- 
ing their  other  course  again.  It  seems  to  me  likely  that  they  will 
have  a  considerable  degree  of  persistence,  but  that  they  will 
be  persistently  payable  is  a  different  matter.  Very  likely  the 
large  prisms  that  have  been  well  mineralized  and  are  payable 
will  be  found  to  be  connected  only  by  comparatively  small  and 
tortuous  channels  that  will  not  pay  for  working  them. 

THE  COST  OF  ZINC  MINING  IN  WISCONSIN 

The  actual  operating  expenses  in  Wisconsin  seem  to  be  about 
the  same  or  a  little  higher  than  in  the  Joplin  field.  The  only 
reason  for  the  increased  cost  is  the  smaller  volume  of  ore  that 


322  THE  COST  OF  MINING 

can  be  secured  from  any  one  shaft.  It  is  usual  to  pay  a  royalty 
of  10  per  cent,  to  the  owners  of  the  land. 

The  cost  of  mining  undoubtedly  depends  largely  on  the 
grade  of  the  ore.  Some  of  the  ores  in  Wisconsin  are  considerably 
richer  than  most  of  those  mined  in  the  Joplin  district. 

A  general  idea  of  the  cost  of  zinc  mining  from  the  three  prin- 
cipal districts  of  the  central  and  far  West  may  be  had  from  the 
following  statements: 

Generalized  statement  of  the  cost  of  producing  spelter  from 
a  mine  in  Wisconsin  yielding  from  its  crude  ore  10  per  cent,  of 
concentrates  assaying  40  per  cent,  zinc: 

Per  Ton 
Crude 

Cost  of  mining,  milling,  and  exploration   ...............  $1.40 

Amortization  of  mining  and  milling  plant  ...............  33 

Depreciation     .......................................  08 

2.00 
Magnetic  separation  of  40  per  cent,  concentrates   =  -  =     .20 

Saving  90  per  cent,  and  producing  0.6  ton  of  60  per 
cent,  concentrate. 

1.50 
Freight  to  smelter  =  --  =  .........................  09 

16.6 

Smelting,  saving  87^  per  cent  ..........................  60 

14.00 
Amortization  of  smelting  plant  =  --  =   .............  08 

166. 

Total  cost   .......................................  $2.78 

Yield  per  ton  =  -    —  =  63  pounds. 
16  if 

Cost  per  pound  spelter,  selling  cost     ..............   4.41  cents 

Dividend  cost     ................................   3.76  cents 

Estimate  of  real  cost  of  spelter  from  Leadville,  Colo.,  sulphide 
ores  averageing  25  per  cent,  zinc,  requiring  magnetic  separation, 
and  smelted  at  a  plant  with  capacity  of  30,000  tons  a  year  of 
45  per  cent,  concentrates;  in  Kansas  gas  belt: 

Cost  of  mining  =  selling  price  of  ore  ...................  $2.57 

Cost  of  separating  (extraction  72  per  cent.)  .............    2.50 

Concentrates  produced  =  1  ton  assaying  45  per  cent. 
zinc  from  2£  tons  crude  ore. 

$3  50 
Freight  to  Kansas  smelter  =  -     -   ....................    1.40 

2J 

Cost  of  smelting,  less  profit  on  sulphuric  acid  =  —    —  .  .  .  .    3.68 


Carried  forward  ....................  .  .  $10.15 


ZINC  MINING  323 

Brought  forward  ......................................  $10.15 

Amortization  of  magnetic  separating  plant  =15  per  cent. 

on  $2.00  cost  per  annual  ton  ........................  30 

Amortization  of  smelting  and  sulphuric  acid  plant  =  10 
per  cent,  on  $14.00  cost  per  annual  ton  of  concentrates 
$14.00 

.................................  56 


General  selling  and  administration  expenses  .............  40 

Total  cost  per  ton  crude  ore    .....................    $11.41 

Saving  by  magnetic  separation,  72  per  cent.,  by  smelting 
80  per  cent  =  57.6  per  cent.  =  288  Ib. 

Cost  per  pound  spelter  just  under  4  cents. 

Generalized  statement  of  the  cost  of  producing  spelter  from 
Joplin  ore,  assuming  4  per  cent,  of  concentrates  yielded  per  ton 
of  crude  ore  milled,  and  neglecting  royalties  and  other  profits: 

Per  Ton 

Crude. 

Cost  mining  and  milling  .............................  $1.25 

Amortization  of  mining  and  milling  plant  ...............  33 

Depreciation     .......................................  08 

Transportation  to  smelter      ...........................  06 

Smelting,  saving  87^  per  cent  ..........................  40 

Amortization  of  smelter  at  10  per  cent.  =  -       -  ........  06 

250 

General  expense     ....................................  04 

Total  cost  at  smelter  ..............................  $2.22 

Yield  =  =42  Ib.  per  ton. 

^O 

Cost  per  pound  spelter   ........................    5.28   cents 

This  is  the  selling  cost,  of  course.     The  dividend  cost  will 

1  S3 
neglect  amortization  and  may  be  computed  at  -  —  =  4.36  cents. 


CHAPTER  XVIII 
OCCURRENCE   AND   PRODUCTION   OF   GOLD 

Value  of  gold  and  transportation  —  Economic  phases  of  gold  mining  — 
Placers  —  Amalgamation  —  Cyanide  and  other  recent  processes  — 
Economic  distinctions  of  gold  ores  —  Quartz-pyrite  lodes  —  Reasons 
for  variations  in  costs  —  Telluride  ores  and  districts  —  Tables  of  gold 
production  —  Production  of  various  districts  —  Cost  of  producing  gold 
per  ounce  —  Profits  of  gold  mining  compared  with  those  of  other  metal 
mines. 

WITHIN  recent  years  gold  has  become  more  than  ever  before 
the  precious  metal  par  excellence.  Its  production  has  not  only 
increased  enormously  in  amount,  but  also  greatly  by  comparison 
with  its  historic  rival,  silver.  A  general  description  of  its  qual- 
ities has  no  place  here,  but  it  will  be  interesting  to  review  the 
more  salient  features  of  its  occurrence  that  bear  on  its  produc- 
tion and  cost. 

A  ton  of  pure  gold  is  worth  $602,836.  This  high  value 
renders  the  metal,  once  secured,  utterly  independent  of  trans- 
portation costs,  for  it  is  evident  that  it  can  be  carried  from  the 
remotest  corner  of  the  globe  for  a  minute  fraction  of  its  worth. 

Another  equally  important  fact  is  that  gold  occurs  to  an 
exceedingly  large  extent  in  such  form  that  its  extraction  from 
ores  is  one  of  the  simplest  of  metallurgical  problems,  so  that  it 
can  nearly  always  be  obtained  by  plants  erected  on  the  spot.  The 
cost  of  such  plants  per  ton  treated  is  moderate.  The  avidity 
with  which  gold  has  been  sought  for  has  resulted  in  the  exhaus- 
tion of  the  mines  in  the  older  civilized  countries  so  that  at  pres- 
ent the.  output  comes  from  new  or  barbarous  countries  where, 
for  the  most  part,  the  climate  is  bad,  labor  costly,  and  transporta- 
tion crudely  developed.  In  the  case  of  gold  mines,  therefore, 
the  question  of  transportation  has  little  or  nothing  to  do  with 
moving  products  from  the  mines,  but  much  to  do  with  moving 
plants  and  supplies  to  the  mines. 

The  history  of  gold  mining  exhibits  three  economic  phases 

324 


c 
OCCURRENCE  AND   PRODUCTION  OF   GOLD  325 

with  reference  to  mechanical  developments:  These  may  be 
divided  chronologically  into,  (1)  The  placer  period.  (2)  The 
amalgamation  period.  (3)  The  cyanide  and  smelting  period. 

1.  From  the  earliest  times  down  to  the  present  gold  has  been 
very  largely  obtained  in  a  metallic  state  from  the  debris  of  ero- 
sion, i.e.,  from  stream  gravels.  Owing  to  its  great  weight  gold 
resists  transportation  by  water  and  lags  behind  while  the  lighter 
minerals  are  carried  off  to  the  sea.  In  this  way  each  stream  in 
a  gold-producing  country  is  a  natural  concentrating  mill  and 
often  retains  the  metal,  or  a  portion  of  it,  that  was  once  scat- 
tered through  enormous  masses  of  rock.  How  great  this  con- 
centration may  be  is  perhaps  not  fully  realized  even  by  mining 
men.  A  stream  bed  100  miles  long  and  a  quarter  of  a  mile  wide 
and  a  few  feet  deep  may  have  gathered  gold  derived  from  thou- 
sands of  cubic  miles  of  eroded  rock.  The  gravel  that  now  con- 
tains the  gold  may  equal  only  a  millionth  part  of  the  mass  that 
once  contained  it.  Undoubtedly  in  every  such  case  a  very  large 
portion  of  the  original  gold  has  also  been  removed,  but  if  even 
one  per  cent,  has  remained,  the  gravel  may  be  ten  thousand  times 
as  rich  in  gold  as  the  rock  from  which  the  gravel  was  derived.  It 
is  evident,  therefore,  that  streams  may  contain  highly  profitable 
deposits  in  regions  where  the  gold  was  originally  scattered  through 
a  multitude  of  insignificant  veins,  all  worthless  in  themselves. 
The  presence  of  placer  gold  in  payable  amounts  does  not  indicate 
that  payable  gold  will  be  found  in  situ.  Many  cases  might  be 
cited  of  important  placer  mines  in  regions  where  there  has  never 
been  a  good  mine  of  any  other  kind.  To  be  sure  quartz  mines 
have  been  found  in  Alaska,  California,  Australasia,  and  many 
other  regions  along  with  placer  deposits.  On  the  other  hand,  in 
early  times  placer  gold  was  obtained  in  Spain,  France,  the  British 
Isles,  Italy,  in  fact  all  over  Europe  where  scarcely  a  payable 
quartz  mine  has  been  known.  It  is  almost  certain  that  the 
older  civilized  countries,  Northern  Africa,  Western  Asia,  China, 
India,  and  Japan,  also  produced  a  full  quota  of  this  metal  from 
sources  now  long  forgotten. 

It  is  highly  probable  that  by  far  the  greater  part  of  the  gold 
possessed  by  mankind,  even  now,  came  from  placer  deposits. 
Nearly  all  gold  was  obtained  in  this  way  until  well  into  the 
nineteenth  century  by  the  process  of  mere  washing,  unaided  by 
amalgamation  or  any  metallurgical  process. 


326  THE  COST  OF  MINING 

2.  The  properties  of  quicksilver  have  been  known  from  very 
early  times,  and  undoubtedly  since  about  the  time  of  Columbus 
this  metal  has  been  used  to  a  large  extent  to  collect  gold  out  of 
its  gangue  in   both  placer  and  quartz-mining  operations.     But 
it  was  not  until  the  almost  simultaneous  discovery  of  gold  in 
California  and  Australia  at  the  middle  of  the  nineteenth  century 
that  amalgamation  came  to  be  the  essential  process  in  the  recov- 
ery of  gold.     Before  the  working  of  extensive  quartz  mines  in 
those  countries  amalgamation  was  used  as  a  useful  adjunct  in 
cleaning  up  the  concentrates  from  gravel  washing,  but  for  that 
purpose  it  was  not  vital.     But  from   1850  to   1890  this  process 
was  the  only  one  successfully  used  by  English-speaking  people, 
who  have   since    1850   produced   most   of   the   world's   gold,  to 
extract  the  metal  from  rocks  in  place. 

The  method  was  found  to  apply  only  to  ores  in  which  the  gold 
lay  in  rather  loose  metallic  particles  in  the  rock.  It  is  essential 
for  amalgamation  that  the  gold  when  it  adheres  to  the  quicksilver 
will  be  free  from  adherence  to  other  minerals.  In  course  of  time 
more  and  more  gold  ores  were  found  where  this  was  not  the 
case.  It  was  found  that  most  gold  veins  produced  amalgamat- 
ing ores  in  the  oxidized  zones  near  the  surface,  but  that  only 
selected  ones  would  yield  their  values  in  this  way  after  the  sul- 
phide zone  was  reached.  Where  an  extraction  of  70  to  90  per 
cent,  was  easy  in  the  oxidized  zone,  the  extraction  would  drop 
to  60  or  50  per  cent,  in  the  sulphides.  At  the  same  time  the 
actual  assay  value  of  the  ore  would  show  some  diminution.  These 
two  causes  were  sufficient  to  render  many  a  mine  unpayable. 
Although  some  mines  continue  to  be  perfectly  amenable  to  amal- 
gamation to  great  depths,  there  were  found  so  very  many  where 
this  was  not  so  that  gold  mining  began  to  decline,  especially 
during  the  eighties.  This  decline  was  due  to  the  limitations  of 
the  amalgamation  process. 

3.  The    ingenuity    of    metallurgists    discovered    about    1890 
several   remedies;   leaching   processes   that   would   extract   gold 
independently  or  could  be  used  as  supplements  to  amalgamation. 
These  were  based  on  the  solubility  of  gold  by  chlorine  gas  and 
by  various  cyanides.     In  one  form  or  another  these  chlorination 
and  cyanide  processes  were  found  to  apply  to  most  gold  ores. 
This  happened  at  a  time  when  the  world  was  hungry  for  gold. 
Great  districts  were  found  like  the   Witwatersrand  where  by 


OCCURRENCE  AND  PRODUCTION  OF  GOLD  327 

amalgamation  the  ores  would  pay  only  in  selected  cases,  but 
with  the  additional  values  saved  by  the  new  process  would  pay 
handsomely.  There  was  a  great  revival  of  the  gold  industry, 
which  has  grown  rapidly  ever  since. 

It  would  be  hardly  proper  to  infer  that  the  whole  increase  of 
gold  production  is  due  to  the  cyanide  and  other  leaching  processes. 
The  old  sources  of  gold  supply  have  not  disappeared.  Placer 
mining  in  Alaska  has  developed  a  respectable  output.  Place? 
mining  in  general  has  been  aided  by  improvements  in  mechan- 
ical appliances,  of  which  by  far  the  most  important  is  the 
dredge.  An  increasing  amount  of  gold  is  also  obtained  by  the 
smelters  as  a  by-product  of  lead  and  copper  ores.  But  it  is 
entirely  proper  to  state  that  since  1890  the  improvements  in  gold- 
mining  practice  have  been  such  as  to  warrant  calling  this  period 
a  new  era  in  the  industry. 

ECONOMIC  DISTRIBUTION  OF  GOLD  ORES 

On  economic  grounds  we  cannot  follow  with  any  satisfaction 
any  division  according  to  the  processes  used.  Various  processes 
are  often  used  simultaneously,  one  supplementing  the  other. 
1  plan  to  discuss  gold  mines  under  the  two  general  groupings  of 
placer  deposits  and  vein  deposits.  Of  placer  deposits  nothing 
more  need  be  said  here. 

GOLD  VEINS,  OR  GOLD  DEPOSITS  IN  SITU 

By  far  the  most  important  source  of  gold  known  to-day  may 
be  called,  for  want  of  a  better  name,  the  quartz-pyrite  lode. 
In  these  deposits  quartz  is  always  the  main  constituent.  With 
the  quartz  there  is  always  a  certain  proporton  of  iron  pyrite, 
usually  less  than  5  per  cent,  of  the  mass,  but  varying  from  |  per 
cent,  to  50  per  cent.  Sulphides  of  lead,  copper,  and  zinc  may 
also  be  present,  but  usually  in  very  subsidiary  quantities.  The 
lodes  occur  in  every  conceivable  attitude  and  manner.  They 
are  of  every  geological  age  from  the  oldest  to  the  youngest.  The 
ores  may  fill  open  crevices  or  fissures  caused  by  shrinking  or 
faulting  in  the  rocks,  they  may  be  replacements  of  other  rocks, 
they  may  simply  fill  up  the  interstices  of  pebbly  beds  or  con- 
glomerate. In  all  cases  it  is  highly  probable  that  quartz-pyrite 
ores  were  deposited  by  hot  waters  of  deep-seated  origin.  In 


328  THE  COST  OF  MINING 

many  cases  there  is  reason  to  believe  they  came  from  "mag- 
matic  "  waters,  waters  once  included  in  molten  rock  masses,  that 
escaped  when  the  pressure  was  released.  In  almost  all  cases 
there  is  some  reason  to  believe  that  these  deposits  have  a  con- 
nection, not  always  explained,  with  igneous  rocks. 

These  ores  occur  in  large  volume.  In  many  cases  millions 
of  tons  are  in  sight.  The  Treadwell  group  in  Alaska  has  mined 
14,000,000  tons  and  reports  7,000,000  in  sight,  averaging  $2.40 
per  ton.  The  Witwatersrand  mines  have  treated  114,000,000 
tons  and  expect  to  mine  some  500,000,000  tons  more,  averaging 
$7  or  $8  a  ton.  Four  mines  in  the  Mysore  group  in  India  have 
mined  7,300,000  tons,  averaging  $18.40  per  ton,  and  have  in 
sight  1,400,000  tons  averaging  $20.  Three  mines  at  El  Oro, 
Mexico,  have  produced  2,450,000  tons  averaging  $16  per  ton, 
and  have  in  sight  some  900,000  tons  averaging  $11.  The  Wit- 
watersrand mines  are  now  treating  20,000,000  tons  a  year. 
These  figures  show  that  this  class  of  gold  mines  constitute  a 
great  industry  carried  on  under  conditions  of  stability  not  infe- 
rior to  those  of  other  kinds  of  mines.  It  will  be  shown  later  that 
they  are  as  profitable  as  any. 

In  these  ores  the  gold  is  said  to  be  almost  entirely  in  a  metallic 
state,  scattered  through  the  gangue  in  particles  of  varying  size. 
Sometimes,  for  instance,  at  the  North  Star  mine,  in  California, 
90  per  cent,  of  the  gold  can  be  recovered  by  amalgamation.  In 
other  cases,  as  at  El  Oro,  Mexico,  and  Goldfield,  Nevada,  only 
10  per  cent,  or  even  less  will  amalgamate.  The  difference  is 
due  not  to  the  state  of  the  metal  itself  but  to  its  degree  of 
subdivision.  In  some  cases  the  gold  is  in  such  minute  par- 
ticles that,  even  with  the  finest  grinding,  it  still  remains  partly 
imbedded  in  particles  of  gangue.  The  gold  is  much  more  apt  to 
be  imbedded  in  the  sulphides  than  in  the  quartz,  hence  it  often 
happens  that  the  alteration  of  the  sulphides  by  artificial  oxida- 
tion or  roasting  sets  free  a  good  deal  of  it.  But  in  this  class  of 
gold  ores  roasting  is  practically  never  necessary  for  a  good  extrac- 
tion by  leaching  processes.  It  is  here  that  the  cyanide  process 
has  its  great  field. 

COST  OF  MINING  AND  MILLING  QUARTZ-PYRITE  ORES 

In  both  mining  and  milling  the  cost  is  most  affected  by  two 
dominant  factors: 


OCCURRENCE  AND   PRODUCTION  OF  GOLD  329 

(a)    The  richness  of  the  ore. 

(6)    The  size  of  the  deposits. 

The  richness  of  the  ore  affects  both  departments  of  the  opera- 
tion through  its  effect  on  the  elaboration  of  processes.  In  the 
case  of  low-grade  ores  the  process  must  be  cheap,  therefore  cheap- 
ness is  secured  if  necessary  by  sacrificing  part  of  the  ore  in  both 
mining  and  milling.  In  the  case  of  the  Treadwell  an  ore  is  mined 
that  assays  $2.70  per  ton.  It  is  mined,  let  us  say,  for  $1.15  and 
milled  for  $0.35  with  an  extraction  of  75  per  cent,  by  mining  and 
90  per  cent,  by  milling,  making  a  total  saving  of  67^  per  cent. 
The  profit  per  ton  actually  milled  is  $0.93.  Now  to  save  more 
of  the  ore,  to  save  90  per  cent.,  would  involve  the  institution  of 
another  method  of  mining  which  would  certainly  be  more  expen- 
sive. Such  a  method  would  almost  certainly  cost  over  $2  a  ton 
and  would  therefore  wipe  out  the  profits  altogether.  In  the 
case  of  milling  the  only  improvement  that  could  be  made  would 
be  by  cyaniding  the  tailings  which  only  run  27  cents  a  ton.  Under 
the  most  favorable  conditions  this  would  not  pay. 

But  if  we  consider  the  Mysore  mines  in  the  same  light  we  get 
utterly  different  results.  These  ores  assay  $20  a  ton.  To  sacri- 
fice 25  per  cent,  in  mining  such  ores  would  be  to  leave  $5  per 
ton  in  the  ground.  To  spend  $3  or  $4  a  ton  more  to  secure  this 
would  be  entirely  proper,  although  such  a  figure  is  twice  the 
whole  cost  of  the  Treadwell  process.  In  milling  a  loss  of  10  per 
cent,  means  $2  a  ton,  and  likewise,  to  spend  say  $1  per  ton  more 
to  save  half  the  loss  would  be  good  business.  In  a  word,  the 
cost  of  $10  a  ton  for  the  Mysore  ores  may  be  just  as  sound  busi- 
ness as  the  cost  of  $1.50  at  the  Treadwell;  and  this  for  no  other 
reason  than  the  greater  value  of  the  ore. 

SIZE  OF  OREBODIES 

With  orebodies  of  the  same  size  we  may  vary  the  cost  within 
wide  limits  at  will,  as  just  shown;  but  human  will  has  no  effect 
on  the  size  of  orebodies:  we  must  take  them  as  they  are.  The 
size  and  attitude  of  the  masses  to  be  attacked  hedge  the  cost  of 
mining  with  limitations  even  more  arbitrary  than  those  imposed 
by  the  grade.  A  uniform  bed  6  ft.  thick  of  ore  of  this  character 
can  be  handled  at  a  total  cost,  on  average  conditions  throughout 
the  world,  of  $3  a  ton.  A  bed  4  ft.  thick  will  cost  somewhat 
more,  say  $3.50  a  ton.  Below  4  ft.  the  cost  will  rise  almost  in 


330  THE  COST  OF  MINING 

inverse  ratio  to  the  thickness,  so  that  a  seam  1  ft.  thick  will 
cost  $14  a  ton,  and  so  on.  Now  it  often  happens  that  most 
important  gold  ores  do  occur  in  such  narrow  streaks.  In  the 
Witwatersrand  the  values  are  usually  confined  to  streaks  from 
4  inches  to  16  inches  thick,  worth  from  $20  to  $100  a  ton.  Under 
the  cost  conditions  ruling  in  that  district  a  4-inch  seam  would 
cost  approximately  $60  a  ton.  This  would  leave  a  profit,  sup- 
posing the  ore  to  assay  $100  a  ton  and  that  the  extraction  is 
95  per  cent.,  of  $35  a  ton,  equal  to  35  per  cent,  of  the  assay  value. 
But  mining  is  not  conducted  that  way.  Such  a  seam  is  mined 
in  a  stope  at  least  4  ft.  wide;  the  ore  seam  is  mixed  with  an  enor- 
mous amount  of  waste,  ten  or  eleven  times  as  much  waste  as 
ore.  The  ore  going  to  the  mill  will  run  only  $8  a  ton  and  the  cost 
is  $5;  but  the  proportion  of  profit  is  about  the  same.  Wherever 
it  is  possible  to  mine  such  seams  by  themselves,  it  should  be 
done;  but  on  account  of  the  friable  nature  of  the  streaks,  in 
many  cases  there  is  so  much  danger  of  loss  in  breaking  the  ore 
that  it  is  considered  safer  to  mill  most  of  the  stuff  broken  regard- 
less of  its  value. 

But  these  considerations  do  not  affect  the  real  cost  of  min- 
ing. In  the  case  cited  above  the  real  orebody  is  only  4  in.  thick 
and  the  cost  is  $60  a  ton.  That  the  value  is  diluted  and  the 
cost  lower  is  only  a  matter  of  convenience.  That  such  orebodies 
would  be  worthless  if  the  ore  streaks  yielded  even  such  appar- 
ently attractive  assays  as  $40,  $20,  to  say  nothing  of  $5,  a  ton  is 
too  obvious  to  argue  about.  Strange  as  it  may  seem,  great  quan- 
tities of  money  are  lost  by  attempting  just  such  impossibilities. 

OTHER  CAUSES  OF  VARIATION 

Quartz-pyrite  ores  are  metallurgically  simple,  and  outside 
of  the  two  great  factors  mentioned  above  there  is  nothing  to 
make  very  great  differences  in  cost.  So  far  as  underground  opera- 
tions go  the  variations  are  so  nearly  wholly  due  to  those  factors 
that  others  may  be  neglected.  In  milling,  the  metallurgical 
problem,  on  average  ores  of  say  $10  a  ton,  will  cause  varia- 
tions between  a  minimum  of  about  75  cents  and  a  maximum  of 
about  $2. 

The  process  is  in  principle  uniform  throughout  the  world. 
It  consists  of  one  or  all  of  the  following  steps: 

1.    Amalgamation  after  crushing  in  stamp  batteries. 


OCCURRENCE  AND   PRODUCTION   OF   GOLD  331 

2.  Concentration  of  refractory  sulphides. 

3.  Leaching  of  tailings  (or,  in  some  cases,  the  original  ore) 
by  cyanide  or  other  solutions. 

Where  concentration  is  undertaken,  it  is  only  in  order  to 
apply  some  special  process  to  a  small  fraction  of  the  ore. 
Such  a  process  may  be  instituted  at  the  mine,  or  the  concen- 
trates may  be  shipped  to  custom  plants;  but  in  any  case  the 
cost  as  applied  to  the  crude  ore  is  never  very  high,  because 
for  each  ton  of  concentrates  there  will  be  from  10  to  100  tons  of 
crude. 

So  many  examples  of  the  cost  of  these  processes  in  actual 
practice  will  be  found  in  the  following  chapters,  that  I  shall  not 
discuss  them  further  here. 

OTHER  GOLD  ORES 

In  the  type  discussed  above  the  gold  in  the  ore  is  free,  or 
native,  i.e.,  it  is  mixed  mechanically,  not  chemically,  with  the 
gangue.  In  Cripple  Creek,  Colorado;  Kalgoorli,  West  Australia, 
and  in  a  number  of  other  less  important  districts,  the  gold  occurs 
to  a  large  extent  as  a  true  ore,  namely  as  tellurides.  Here  the 
gold  is  involved  in  a  chemical  combination  with  tellurium  and 
to  a  less  extent  with  other  elements.  Here  amalgamation, 
except  to  a  limited  extent  in  the  oxidized  zone,  is  utterly  inef- 
fective. Dependence  must  be  had  on  smelting  or  on  leaching  pro- 
cesses of  a  type  inherently  more  expensive  than  those  applied 
to  quartz-pyrite  ores.  The  reason  for  this  is  that  in  the  raw 
state,  the  gold,  or  a  large  part  of  it,  will  not  desert  its  companion 
minerals  to  unite  with  those  offered  by  the  leaching  solutions. 
To  get  around  this  difficulty  it  is  necessary  to  break  up  the  tellu- 
rides by  roasting  before  attempting  to  leach.  To  do  this  costs 
$1.50  a  ton.  This  cost  is  not  wholly  for  the  roasting  itself,  but 
is  due  partly  to  the  fact  that  ordinary  wet  crushing  by  stamps 
is  not  desirable  when  roasting  is  to  be  done.  It  is  necessary  to 
resort  to  the  much  more  costly  process  of  dry  crushing.  After 
roasting  the  processes  usually  proceed  so  far  as  cost  goes  about 
as  in  the  case  of  quartz-pyrite  ores  of  pretty  high  grade;  for  these 
tellurides  ores  are,  on  account  of  the  high  working  cost,  invari- 
ably of  fairly  high  grade.  They  are  often  concentrated  a  good 
deal  by  hand  sorting,  so  that  when  I  speak  of  high  grade  I  mean 
when  they  get  to  the  mill  or  smelter.  Referring  to  the  rock 


332 


THE  COST  OF   MINING 


actually  broken  in  the  stopes,  the  minimum  grade  of  this  type  of 
ore  that  can  be  profitably  worked  is,  under  present  conditions, 
about  $8  a  ton. 

GOLD  PRODUCTION  OF  THE  WORLD,  1851-1907 


Year 

Value 

Year 

Value 

1851  
1852 

$67,600,000 
132,800,000 

1880  
1881  

$106,600,000 
103,102,000 

1853  
1854 

155,500,000 
127  500  000 

1882  
1883 

102,000,000 
95,400,000 

1855 

135,100,000 

1884  

101,700,000 

1856  
1857 

147,600,000 
133,300,000 

1885  
1886  

108,400,000 
106,000,000 

1858  

124,700,000 

1887  

105,775,000 

1859 

124  900  000 

1888 

110,197,000 

1860  
1861  

119,300,000 
113,800,000 

1889  
1890  

123,489,000 
118,848,700 

1862 

107,800,000 

1891  

130,650,000 

1863 

107  000  000 

1892  

146,292,600 

1864 

113  000  000 

1893 

158,437,551 

1865 

120,200,000 

1894  

182,509,283 

1866  

121,000,000 

1895  

198,995,741 

1867 

104  000  000 

1896 

211,242,081 

1868 

109  700,000 

1897  

237,833,084 

1869  
1870 

106,200,000 
106,900,000 

1898  
1899  

287,327,833 
311,505,947 

1871  

1872 

107,000,000 
99  600  000 

1900  
1901 

258,829,703 
260,877,429 

1873 

96  200  000 

1902  

298,812,493 

1874  
1875 

90,800,000 
97  500,000 

1903  
1904  

329,475,401 
349,088,293 

1876  
1877  
1878  
1879 

103,700,000 
114,000,000 
119,000,000 
109  000  000 

1905  
1906  
1907  
1908       .... 

378,411,754 
405,060,969 
412,556,136 
444,382,312 

(See  tables  on  pages  334  and  335.) 


OCCURRENCE  AND   PRODUCTION   OF   GOLD 


333 


The  following  table  is  designed  to  show  the  approximate  yield 
of  some  of  the  important  gold-mining  districts  of  the  world  in 
tonnage  and  value: 

QUARTZ  PYRITE  DISTRICTS 


Name  of  District 

Country 

Tons  Milled 
per  Year 

Value  of 
Annual  Yield 

Witwatersrand  . 

Transvaal 

20,000  000 

$150  000  000 

Various  districts 

Rhodesia 

1  650  000 

12  000  000 

Kolar  
Various  districts  excluding 
Kalgoorlie  

British  W.  Africa  . 
Mysore,  India  .... 

W.  Australia  

500,000 
600,000 

5,000,000 
10,000,000 

18,000,000 

El  Oro  

Mexico  

600,000 

9,000,000 

San  Juan    
Black  Hills  .    . 

Colorado    
S.  Dakota 

500,000 
1  700  000 

6,000,000 
7  000  000 

Juneau 

Alaska 

1  300  000 

3  250  000 

Nevada  County  

California  

225,000 

2,000  000 

Goldfield  
Thames  district 

Nevada    .  
New  Zealand 

300,000 
500  000 

10,000,000 
6  000  000 

Oriental  Consolidated  

Korea  

250,000 

1,300,000 

TELLURIDE  MINING  DISTRICTS 

Cripple  Creek  
Kalgoorlie  

Colorado    
West  Australia  .  .  . 

500,000 
1,650,000 

11,000,000 
16,500,000 

DISTRICTS  PRODUCING  GOLD  AS  AN  IMPORTANT  CONSTITUENT  OF 
SMELTING  ORES 

Leadville  

Colorado    
Utah 

— 

1,000,000 
2,250,000 
1,600,000 

Tintic  
Park  City  

Utah  

.   PLACER  DISTRICTS 

Butte  &  Yuba  Counties.  .  .  . 
Nome  

California  (principa 
Alaska  (drifting  an 
ing  frozen  graveb 
Alaska  (drifting  an 
ing  frozen  gravels 
Yukon    Territory 
draulicking,       an 
frozen  gravels) 

lly  dredging)  . 
d  hydraulick- 

4,500,000 
7,000,000 
8,000,000 

3,300,000 
24,000,000 

Fairbanks  
Dawson 

d  hydraulick- 

0  .  :  

^drifting,  hy- 
d  dredging 

Various  districts  in  Siberia. 

About 

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336  THE  COST  OF  MINING 

COST  OF  PRODUCING  GOLD  PER  OUNCE 

It  is  to  be  remembered  that  fine  gold  is  worth  $20.67  per  ounce. 
In  order  to  gain  some  idea  of  the  proportion  of  profit  in  gold 
mining  as  compared  with  other  metals  we  may  conveniently 
take  the  cost  per  ounce  as  an  index.  It  is  a  current  statement 
that  gold  costs  more  than  it  is  worth.  If  one  were  to  charge 
up  against  it  the  fruitless  explorations  and  unprofitable  enter- 
prises of  which  it  is  the  object  it  is  impossible  to  conjecture  how 
near  true  this  statement  might  prove  to  be.  Very  likely  those 
responsible  for  the  statement  and  who  believe  it  have  never  gone 
beyond  the  point  of  making  a  guess.  In  my  judgment  the  state- 
ment is  not  any  more  true  with  reference  to  gold  than  with  any 
other  metal.  Just  as  the  selling  price  of  copper  is  determined 
in  the  main  by  the  costs  obtained  by  the  successful  enterprises 
which  are  responsible  for  the  major  portion  of  the  output,  so 
the  value  of  gold  is  established  by  the  correspondingly  success- 
ful properties  and  districts  which  yield  the  greater  part  of  it. 

In  the  Transvaal  the  proportion  of  total  yield  of  gold  that 
has  been  paid  in  dividends  is  almost  exactly  25  per  cent.  The 
cost  of  gold,  therefore,  in  this  district  which  is  yielding  one-third 
of  the  world's  output  has  been  to  date  three-quarters  of  $20.67, 
or  about  $15.50  an  ounce.  This  proportion  is  holding  good  at 
present,  the  record  for  the  year  1908  showing  dividends  equal  to 
28  per  cent,  of  the  gross  value  produced,  indicating  a  cost  per 
ounce  of  about  $14.85. 

We  might  compare  the  record  of  the  Robinson,  at  present 
the  world's  most  profitable  gold  mine,  against  the  Calumet  & 
Hecla,  the  world's  most  profitable  copper  mine.  The  compari- 
son is  approximately  as  follows: 

The  Calumet  &  Hecla:  gross  value  of  yield  about  $312,000,000; 
dividends  $108,500,000,  which  is  35  per  cent. 

The  Robinson  mine:  gross  value  of  yield  $60,000,000;  divi- 
dends $32,000,000,  equal  to  54  per  cent. 

In  Cripple  Creek,  Colorado,  I  estimate  the  cost  of  gold  to 
have  averaged  about  $17  per  oz.  or  82  per  cent,  of  its  value, 
while  the  principal  mine  —  the  Portland  —  has  secured  gold  at 
a  cost  of  $14.50  per  oz.  or  70  per  cent,  of  its  value. 

In  Kalgoorlie,  West  Australia,  I  have  no  figures  for  the  dis- 
trict at  large,  but  seven  or  eight  of  the  leading  mines  have  paid 


OCCURRENCE  AND   PRODUCTION  OF  GOLD  337 

dividends  equal  to  approximately  40  per  cent,  of  the  yield  in 
gold,  so  that  the  cost  per  ounce  is  only  $12.40.  These  mines 
have  furnished  so  large  a  proportion  of  the  total  yield  of  that 
district  that  it  seems  safe  to  conclude  that  the  cost  of  the  entire 
yield  has  not  exceeded  $15  per  oz. 

In  the  Kolar  district  of  India,  the  four  leading  mines  respon- 
sible for  nearly  all  the  output  paid  dividends  equal  to  44  per  cent, 
of  the  gross  value.  Hence  we  conclude  that  the  cost  of  gold  has 
not  exceeded  $12  for  those  mines,  and  probably  not  over  $14 
for  the  entire  district. 

At  El  Oro,  Mexico,  the  record  of  the  three  leading  mines 
shows  profits  of  40  per  cent.,  indicating  cost  of  gold  of  only  $12 
per  oz.  It  is  not  at  all  probable  that  the  fruitless  prospecting 
in  that  district  would  bring  the  total  cost  up  to  more  than  $14. 

While  it  is  not  probable  that  such  favorable  showings  for  gold- 
mining  districts  can  be  extended  to  cover  the  whole  list  of  dis- 
tricts, it  is  evident  that  the  successful  gold  mines  are  fully  as 
profitable  as  successful  copper  mines.  The  value  of  gold  pro- 
duced in  the  world  is  almost  twice  the  value  of  the  copper  pro- 
duction, so  that  I  feel  warranted  in  saying  that  the  current  belief 
that  copper  mining  is  the  most  profitable  form  of  mining  enter- 
prise, and  that  gold  mining  is  one  of  the  least  profitable,  is  far 
from  justified.  It  is  to  be  remarked,  however,  that  in  the  United 
States  copper  is  a  more  important  product  than  gold  and  it  is 
in  the  hands  of  a  smaller  number  of  much  larger  concerns,  which 
have  paid  larger  dividends  than  any  individual  gold  mine.  In 
the  world  at  large  the  reverse  is  true. 


CHAPTER  XIX 

QUARTZ-PYRITE   GOLD   MINES 

Treadwell  group  in  Alaska  —  Exhibit  of  conditions  and  costs  —  Home- 
stake  —  San  Juan  region  in  Colorado  —  Camp  Bird  —  Liberty  Bell  — • 
El  Oro  district  in  Mexico  —  Esperanza  and  El  Oro  mines  —  Kolar 
district  in  Mysore,  India  —  Details  of  cost  factors  —  Records  of  the 
mines  —  A  question  of  bookkeeping  —  Witwatersrand  —  Average  re- 
sults —  The  Robinson  mine  —  Generalizations  on  the  price  of  labor  and 
costs. 

INCLUDED  in  the  class  of  quartz-pyrite  mines  are  all  of  the 
properties  of  the  Witwatersrand  in  the  Transvaal,  in  fact  all  the 
gold  mines  of  South  Africa,  nearly  all  the  mines  in  eastern  Aus- 
tralia, those  of  the  Kolar  district  in  India,  of  El  Oro  in  Mexico, 
of  California,  Nevada,  and  Douglas  Island,  Alaska.  In  general, 
these  ores  are  a  light-colored  or  whitish  quartz  containing  from 
0.25  to  10  per  cent,  of  iron  pyrite  and  other  sulphides  in  varying 
but  usually  subsidiary  amounts.  The  quartz  and  pyrite  may 
fill  open  fissures,  or  they  may  be  replacements  of  country  rock, 
or  the  cementing  material  of  beds  of  conglomerate.  Deposits 
of  this  kind  have  proved  to  be  extensive,  often  persistent  to  great 
depths,  and  are  worked  on  a  grand  scale. 

TREADWELL  GROUP 

The  group  of  mines  on  Douglas  Island,  Alaska,  known  as  the 
Treadwell,  Mexican,  and  Ready  Bullion,  furnish  ore  for  780 
stamps  at  the  rate  of  1,200,000  tons  a  year.  This  work  with 
good  reason  stands  at  the  head  of  the  list  of  quartz-pyrite  opera- 
tions, furnishing  an  example  of  the  simplest  metallurgical  prob- 
lem, the  lowest  costs,  and,  I  believe,  the  best  management  to 
be  found  in  this  class  of  mining.  The  external  and  internal 
factors  which  affect  the  results  obtained  are  of  great  interest  to 
the  student  of  mine  economics. 

Robert  Kinzie,  now  superintendent  of  all  the  mines,  pub- 
lished in  Trans.,  A.  I.  M.  E.,  Vol.  XXXIV,  a  detailed  account  of 

338 


QUARTZ-PYRITE   GOLD  MINES 


339 


340  THE  COST  OF  MINING 

these  properties  up  to  1902;  in  addition  to  this  we  have  the  full 
and  excellent  reports  issued  by  the  companies.  On  the  whole 
the  information  available  is  definite  and  satisfactory. 

Along  a  great  porphyry  dike  which  cuts  the  black  slate  of 
Douglas  Island,  there  are  three  or  four  large  lenses  or  ore  shoots 
where  the  dike  has  been  profoundly  altered  and  silicified  by  the 
action  of  magmatic  waters.  The  largest  and  most  northerly  of 
these  is  the  Treadwell  orebody,  which  was  400  ft.  wide  and  1000 
ft.  long  at  the  surface.  The  Mexican  and  Ready  Bullion  ore- 
bodies  are  approximately  20  ft.  thick  and  from  500  to  1000  ft. 
long  in  horizontal  section.  These  orebodies  are  situated  within 
a  stone's  throw  of  a  splendid  harbor  on  a  sheltered  waterway, 
which  extends  for  1000  miles  from  Puget  Sound  to  Skagway. 
The  most  convenient  and  cheapest  transportation  facilities  are 
thus  provided  for  coal,  timber,  and  other  supplies.  Concentrates, 
in  the  shape  of  auriferous  iron  pyrite,  are  shipped  800  miles  to 
the  Tacoma  smelter  at  a  cost  of  $1.72  per  ton.  The  climate, 
though  rainy,  is  mild  and  pleasant,  corresponding  to  that  of 
Scotland  or  southern  Norway.  While  wages  are  not  low,  accord- 
ing to  some  standards  (averaging  about  32  cents  per  hour  in  actual 
cost),  I  believe  that  labor,  owing  to  its  efficiency,  is  really  cheap. 
In  addition  to  these  advantages  an  abundance  of  water  power  is 
available.  Little  pumping  is  necessary  in  the  mines.  These 
external  factors  are  so  favorable  as  to  be  quite  exceptional,  per- 
haps unrivaled. 

INTERNAL  FACTORS 

The  internal  factors  are  also  exceptional.  The  orebodies 
are  large  and  firm;  standing  nearly  vertical  between  pretty  solid 
walls,  they  came  up  under  the  glacial  drift  in  large  masses  that 
could  be  attacked  in  open  pits.  The  metallurgical  problem  is 
the  simplest. 

Mining  these  orebodies,  therefore,  presented  to  the  manage- 
ment the  following  factors:  Several  million  tons  of  ore  favorably 
situated  for  cheap  handling,  but  containing  less  than  $3  per  ton. 
To  make  the  maximum  profit,  or  to  make  profits  at  all,  required 
cheap  methods  both  of  mining  and  milling. 

These  conditions  as  to  mining  were  met  at  the  beginning  by 
the  "milling"  method  in  an  open  pit;  and  as  to  treatment  by 
the  adoption  of  a  large,  simple,  water-actuated  stamp  mill  in 


QUARTZ-PYRITE  GOLD   MINES  341 

which  ore  could  be  amalgamated  and  concentrated  in  wholesale 
quantities  and  at  minimum  cost.  The  simple  metallurgical 
treatment  proved  amply  effective,  for  the  ore  is  thus  treated  at 
a  cost  of  17  to  27  cents  a  ton  with  an  apparent  extraction  of  90 
per  cent. 

As  the  mining  proceeded  it  became  increasingly  difficult  and 
finally  impossible  to  maintain  the  required  output  from  open 
pits  and  it  became  again  imperative  to  devise  a  method  of  min- 
ing, this  time  underground,  that  would  be  cheap  enough.  It 
was  a  broader  problem  than  the  first  because  it  involved  the  ques- 
tion of  how  much  ore  could  be  sacrificed  on  the  one  hand  and 
how  cheap  the  mining  could  be  done  on  the  other.  It  was  dis- 
covered that  about  75  per  cent,  of  the  ore  could  be  mined  without 
timbers  from  large  chambers  kept  full  of  broken  ore,  only  enough 
being  drawn  off  at  the  bottom  to  afford  room  for  the  miners 
at  the  top.  In  the  widest  deposit  this  process  costs  $1  per  ton 
and  in  the  narrower  bodies  $1.20  per  ton. 

No  change  being  required  in  milling  methods  on  account  of 
increasing  depth  the  inauguration  of  the  method  of  mining 
described  seems  to  have  solved  the  problem  of  making  these  ore- 
bodies  pay  to  an  indefinite  depth  as  long  as  they  maintain  any- 
thing like  their  present  size  and  value. 

The  milling  of  the  Treadwell  ores,  its  results,  the  collection 
and  shipment  of  concentrates,  are  all  shown  up  to  1902  in  the 
accompanying  tables  given  by  Mr.  Kinzie.  It  is  well  to  note 
that  in  each  of  the  mines  the  value  recovered  is  about  equally 
divided  between  free  gold  saved  by  amalgamation,  and  aurifer- 
ous pyrite  which  constitutes  2  per  cent,  or  less  of  the  original 
ore.  The  shipment  and  treatment  of  these  concentrates  costs 
about  $6.75  a  ton  and  when  spread  over  the  original  ore  milled 
costs  from  10  to  14  cents  a  ton. 


342 


THE  COST  OF  MINING 


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QUARTZ-PYRITE   GOLD  MINES 


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344 


THE  COST  OF  MINING 


The  actual  results  and  average  costs  up  to  the  end  of  the 
reports  for  1907  for  the  various  mines  are  as  follows: 


Treadwell 

Mexican 

Ready  Bullion 

Tons  milled  

8,485,085 

2,447,063 

1,841,079 

Tons  in  sight  .  .  .  .... 

4,982,883 

794,924 

1,378  651 

Feet  development  work  14  years 

74  717 

59960 

27362 

Tons  developed  per  foot  approximate  .  .  . 
Total  value  recovered  per  ton  
Profits,  operating,  per  ton  

120 

$2.44 
1.16 

54 

$2.55 
0.77 

100 

$1.89 
0.25 

Total  operating  cost  per  ton  
Last  depreciation  figures  per  ton  
Total  estimated  cost  

1.28 
0.21 
1.49 

1.78 
0.23 
2.01 

1.64 
0.35 
1.99 

From  the  above  it  appears  that  the  Treadwell  and  Mexican 
mines  have  been  very  profitable,  but  that  the  Ready  Bullion  has 
not  as  yet  earned  enough  to  justify  the  investment,  but  the 
improvement  in  grade  at  the  bottom  is  such  as  to  be  very  promis- 
ing for  the  future.  It  further  appears  that  the  combined  mines 
have  treated  12,773,227  tons  of  quartz  worth  $30,446,947  or  $2.38 
per  ton  for  a  total  operating  cost  of  $1.43  per  ton,  to  which  is 
to  be  added  24  cents  a  ton  as  a  fair  estimate  (it  seems  very  lib- 
eral) of  the  value  of  the  plants  employed;  the  total  to  be  esti- 
mated for  cost  being  $1.67  per  ton  and  the  profit  71  cents  or  30 
per  cent,  of  the  gross  value  recovered. 

Below  are  given,  more  in  detail,  the  costs  of  these  remark- 
able mines,  for  the  Treadwell  in  the  year  ending  May  31,  1907, 
and  for  the  Mexican  and  Ready  Bullion  for  the  calendar  year 
1907,  the  ore  all  coming  from  underground  stopes  except  12  per 
cent,  of  the  Treadwell  ore  which  came  from  an  open  pit.  In 
each  case  the  costs,  while  not  the  lowest  on  record,  are  quite 
near  the  average.  I  believe  in  the  case  of  the  Treadwell  that  the 
costs  are  overstated,  certain  sums  being  credited  to  the  receipts 
which  might  logically  be  deducted  from  the  costs,  but  I  have 
made  no  attempt  to  change  the  figures  given. 


QUARTZ-PYRITE   GOLD   MINES 


345 


Treadwell 

Mexican 

Ready  Bullion 

Tons  milled                               

702,953 

214,263 

213,370 

Cost  mining  and  development    
Milliner 

$1.00 
0  17 

$1.19 
0.27 

$1.00 
0  36 

Shipping  and  smelting  concentrates    .... 
General  expense    
Construction 

0.12 
0.04 
0.04 

0.12 
0.09 
0.01 

0.11 
0.07 
001 

Total  operating  
Depreciation                                            .  . 

$1.37 
0.21 

$1.68 
0.23 

$1.55 
035 

Grand  total    

$1.58 

$1.91 

$1.90 

HOMESTAKE 

From  the  Treadwell  group  one  naturally  turns  to  the  Home- 
stake  mine  in  the  Black  Hills,  South  Dakota,  to  make  compari- 
sons. This  is  the  greatest  gold  mine  in  the  world  in  point  both  of 
tonnage  and  of  gross  value  produced.  In  eight  years  out  of  the 
last  nine  the  output  has  been  as  follows: 


Tons  milled 9,383,114 

Gold  recovered $34,638,518 

Cost    28,587,300 

Profit , 6,051,218 


Per  Ton 
$3.69 

3.04 
0.65 


It  is  to  be  observed  that  the  costs  are  nearly  twice  as  high 
as  at  the  Treadwell  group.  Why  the  difference  should  be  so 
great  does  not  appear.  One  is  tempted  to  suspect  that  the 
management  may  have  had  something  to  do  with  it,  although 
nothing  is  more  dangerous  than  to  jump  at  such  a  conclusion. 

The  external  conditions  are  not  so  favorable  as  at  Douglas 
Island.  The  wages  are  about  the  same,  but  there  is  not  such  a 
good  supply  of  water  and  timber,  and  transportation  is  more 
costly.  The  cost  of  water  alone  is  approximately  10  cents  a  ton 
at  the  Homestake. 

The  internal  factors  would  appear  to  be  about  the  same.  A 
vast  body  of  silicified  slate  has  been  followed  from  the  surface  to 
a  depth  of  nearly  1600  ft.  The  thickness  is  several  hundred  feet. 
The  metallurgical  problem  seems  to  be  simple;  4.7  tons  are  crushed 
per  stamp  per  day.  Amalgamation  is  followed  by  cyaniding 
the  tailings  at  the  very  moderate  cost  of  18  cents  per  ton  stamped. 


346  THE  COST  OF  MINING 

The  finer  slimes  receive  a  further  treatment  not  described  in  the 
reports. 

There  are  1000  stamps  employed  on  Homestake  ore  in  six 
different  mills.  The  whole  milling  process  in  1907  cost  as  fol- 
lows per  ton : 

Milling  and  amalgamating 44c. 

Cyaniding    18c. 

Slime  treatment  and  construction 24c. 

Total    86c. 

The  recent  cost  for  mining  and  development  is  $2  a  ton.  For 
mining  at  the  rate  of  4000  tons  a  day  from  a  single  orebody  this 
seems  high.  Possibly  the  methods  are  too  good;  a  more  wasteful 
one  might  be  more  profitable.  Assuming  that  with  the  methods 
that  have  been  used  the  profit  now  averages  75  cents  a  ton,  it  is 
demonstrable  that  the  adoption  of  a  method  that  would  reduce 
the  mining  cost  from  $2  to  $1.25  per  ton  at  a  sacrifice  of  25  per 
cent,  of  the  ore  now  saved  would  increase  the  value  of  the  mine 
60  per  cent.  If  on  the  present  basis  20,000,000  tons  would  be 
mined  in  fifteen  years  at  a  profit  of  $15,000,000,  the  present  value, 
figuring  interest  on  deferred  payments  at  4  per  cent.,  would  be 
$11,111,000.  On  the  other  basis,  15,000,000  tons  mined  in  eleven 
years  at  a  profit  of  $22,500,000  would  give  a  present  value  of 
$17,700,000. 

MINES  OF  THE  SAN  JUAN  REGION,  COLORADO 

The  external  conditions  at  the  Camp  Bird  property  are  unfa- 
vorable. The  altitude  of  the  mine  is  11,200  ft.  in  steep  and  snowy 
mountains.  Two  years  ago  a  snow  slide  destroyed  the  mill  and 
delayed  operations  six  months.  Wages  are  about  average  for 
the  Rocky  Mountain  region,  but  it  is  not  to  be  supposed  that 
men  are  capable  of  sustaining  their  best  exertions  at  such  an 
altitude.  Supplies  have  to  be  hauled  several  miles  from  the 
railroad  station,  Ouray,  over  a  steep  mountain  road  often  blocked 
with  snow. 

The  internal  factors  are  as  follows:  The  ore  occurs  in  exten- 
sive shoots  in  a  nearly  vertical  quartz  vein  3  to  10  ft.  thick,  in  a 
horizontal  formation  of  bedded  porphyries.  In  a  total  length  of 
4500  ft.  explored  there  are  four  ore  shoots  aggregating  1700  ft. 
long.  This  has  involved  an  expense  for  development  of  76  cents 
a  ton. 


QUARTZ-PYRITE  GOLD  MINES  347 

Stoping  is  done  as  at  the  Treadwell  by  breaking  the  whole 
vein  upward  from  the  levels  and  drawing  out  only  enough  to 
make  room  for  the  miners.  Up  to  April,  1907,  about  489,000 
tons  had  been  taken  out  and  milled;  112,000  tons  remained  broken 
in  the  stopes. 

CAMP  BIRD  MINE  FOR  THE  YEAR  ENDING  APRIL  30,   1908 

Blocking  out  ore    $0.64 

Ore  breaking 60 

Timbering 69 

Loading  and  tramming 78 

Hoisting    18 

Lighting  and  pumping    15 

Engineering,  sampling,  and  assaying 10 

Foremen  and  bosses    17 

Power    32 

Maintenance 44 

Total  mining,  78,966  tons 4.08 

Transportation  to  mill    28 

Stamp  milling  80,087  tons 1.19 

Cyaniding    61 

Shipping  and  selling  concentrates 1.42 

General    expense,    consulting    engineer,    administration, 

taxes,  etc 1 .50 

Depreciation  average  five  years 78 

Survey  of  unpatented  claims 06 

London  office  expense 35 

Total  cost  per  ton $10.27 

Total  values  recovered  were  $25.90  per  ton;  of  these  74.76 
per  cent,  was  obtained  by  amalgamation;  16.02  per  cent,  by  con- 
centration, and  9.22  per  cent,  by  cyaniding.  The  extraction  of 
the  gold  is  given  at  93.84  per  cent.  Adopting  this  as  a  rough 
estimate  or  the  total  extraction  of  all  metals,  we  get  $27.60  as 
the  orginal  value  of  the  ore,  so  that  the  mill  losses  are  approxi- 
mately $1.70  per  ton. 

It  is  interesting  to  compare  this  record  with  that  of  the  Mysore 
mine  in  India,  which  extracts  a  somewhat  lower  grade  of  ore 
without  any  expense  for  the  treatment  of  concentrates,  and  mined 
ore  during  the  same  year  at  a  cost  of  $9.25  a  ton,  although  the 
wages  at  the  Mysore  mine  seem  to  have  averaged  only  36  cents 
a  day.  The  number  of  men  employed  at  the  Camp  Bird  is 
approximately  300  for  an  output  of  80,000  tons,  while  at  the 
Mysore  8334  are  employed  for  an  output  of  234,000  tons. 

It  appears  that  the  operations  for  the  year  given  above  were 
cheaper  than  for  former  years,  an  explanation  being  found  in  the 


348  THE  COST  OF  MINING 

fact  that  some  17,000  tons  of  ore  were  withdrawn  from  the  stopes 
more  than  were  broken  in  the  stopes,  and  because  the  tonnage 
treated  during  the  year  was  greater  than  ever  before  without  any 
increase  in  the  amount  of  general  expense.  During  the  past 
three  years  184,605  tons  were  treated,  averaging  $28.90  per  ton, 
and  the  earnings  were  $16  a  ton,  leaving  $12.90  as  the  actual  cost. 
It  is  stated  that  the  extraction  reported  for  1908  was  the  high- 
est on  record.  If  we  assume  that  the  extraction  has  averaged 
92  per  cent,  the  performance  of  the  mine  may  be  calculated  as 
follows : 

Assay  value  of  ore $31.40 

Loss  in  milling 2.50 

Yield    28.90 

Total  operating  costs,  including    construction,  develop- 
ment, and  London  expenses 12.90 

Total  costs  and  losses  15.40 

Profit  per  ton  16.00 

Percentage  of  profit 51.00 

These  costs  are  much  higher  than  those  of  the  Liberty  Bell 
mine  a  few  miles  away.  The  reason  undoubtedly  is  the  higher 
grade  of  the  Camp  Bird  ores;  this  accounts  for  higher  costs  in 
taxes,  freight,  and  treatment,  etc.,  and  furnishes  the  excuse  for 
pretty  liberal  fees  and  management. 

RESULTS  OF  OPERATIONS  AT  THE  LIBERTY  BELL  MINE 

*Tons  mined  and  milled 510,729 

Net  receipts  per  ton    $7.20 

Costs: 

General  expense $1.05 

Mining  and  development 2.65 

Tramming  to  mill    0.42 

Milling  1.70 

Shipping  concentrates 0.36 

Total  operating    ~  $6.34 

Depreciation 0.30 

Total    $6.64 

Profit  per  ton   0.56 

At  this  mine  26,446  ft.  of  opening  work  has  been  done  in  nine 
years,  resulting  in  mining  and  developing  about  900,000  tons  of 
ore,  or  34  tons  to  1  ft.  The  cost  per  foot  of  development  seems 
to  be  about  $10,  and  per  ton  developed,  $0.30.  The  stoping 
width  is  about  5  ft. 


QUARTZ-PYRITE  GOLD  MINES  349 

Analyzing  roughly  the  difference  between  the  costs  of  the 
Camp  Bird  and  the  Liberty  Bell  it  appears  that  the  former  is 
more  expensive,  as  follows: 

Per  Ton 

Underground  cost    $1 .46 

Milling  0.15 

Treatment  charges 1.45 

General  expense 2.00 

Depreciation  of  plant    0.55 

Total    $5.61 

It  may  be  fairly  said  that  the  higher  cost  at  the  Camp  Bird 
for  milling  and  treatment  charges  are  entirely  justified  by  the 
higher  grade  of  the  ore.  As  to  other  expenses  one  may  doubt 
their  necessity. 

Other  mines  in  the  San  Juan  region  whose  reports  are  avail- 
able are  the  Tomboy  and  the  Smuggler  Union.  I  have  not 
investigated  these  reports,  but  in  a  general  way  the  costs  at  these 
mines  are  not  greatly  different  from  those  of  the  Liberty  Bell. 
These  mines  have  each  reported  costs  lower  than  those  given, 
for  a  single  year,  but  it  is  doubtful  if  they  would  be  lower  if 
figured  upon  a  long  term  of  years. 

In  general  mining  in  the  San  Juan  region  costs  about  $7  a 
ton.  The  external  factors  of  a  rough  surface,  a  severe  climate, 
costly  transportation  and  a  debilitating  altitude  are  all  unfavor- 
able. The  internal  factors  are  such  that  only  a  small  tonnage 
can  be  maintained.  Metallurgically  the  ores  are  only  fair,  and 
while  not  markedly  difficult,  do  not  seem  to  permit  of  full  treat- 
ment at  a  cost  of  less  than  $2  a  ton.  The  explanation,  therefore, 
of  the  big  jump  in  costs  from  $1.50  at  the  Treadwell  and  $3  at 
the  Homestake  to  $7  in  the  San  Juan  is  the  cumulative  effect  of 
a  variety  of  both  external  and  internal  factors. 

EL  ORO,  MEXICO 

The  mines  at  El  Oro,  Mexico,  are  well  managed;  they  pay  good 
dividends  and  issue  good  reports.  The  two  principal  mines  are 
the  Esperanza  and  El  Oro  on  the  San  Rafael  vein  and  the  Dos 
Estrellas  on  a  parallel  vein  to  the  westward.  The  Mexico  mine 
just  north  of  the  Esperanza  on  the  San  Rafael  lode  is  promising. 
The  veins  are  large  mineralized  shear  zones  in  slate  or  shale. 
There  are  numerous  cross  faults.  The  veins  are  for  the  most 


350 


THE  COST  OF  MINING 


QUARTZ-PYRITE   GOLD   MINES  351 

part  obscured  by  a  later  flow  of  andesitic  lava  which  covers  the 
important  orebodies  to  a  depth  of  several  hundred  feet.  The 
ore  is  quartz  with  pyrite  sprinkled  through  it.  The  gold  is  very 
finely  divided,  and  will  yield  by  amalgamation  only  about  15 
per  cent. 

GRADE  OF  ORE  AND  OUTPUT 

It  appears  that  the  Esperanza  mine  up  to  the  end  of  1908 
produced  1,176,117  tons  averaging  $19  per  ton,  and  El  Oro 
1,080,000  tons  to  the  end  of  1907  averaging  $11.39  per  ton,  in 
both  cases  by  actual  yield.  Probably  these  figures  indicate 
average  ores  produced  by  the  principal  mines  in  the  district.  If 
so,  we  get  a  yield  of  $16.33.  It  is  probable  that  the  extraction 
has  averaged  something  like  88  per  cent.,  so  that  the  assay  value 
of  the  ore  as  mined  must  be  about  $18.50  per  ton.  Two  distinct 
types  of  ore  have  been  worked:  an  oxidized  cyaniding  ore  aver- 
aging about  $13  a  ton  by  assay  value,  by  extraction  about  $11.40 
as  stated  above  for  the  material  mined;  and  a  narrower  vein  of 
sulphides  discovered  and  worked  on  the  Esperanza,  and  lately 
on  the  Mexico  mine,  the  ore  from  which  has  been  treated  mainly 
in  the  smelters  and  has  been  of  high  grade,  much  of  it  running 
three  or  four  ounces  per  ton.  Below  are  given  the  figures  for 
mining  and  milling  at  the  El  Oro  and  Esperanza  up  to  the  end 
of  1907,  since  which  time  the  reports  indicate  nothing  to  warrant 
changing  them. 

In  general,  the  milling  ores  of  the  district  may  be  described 
as  follows: 

Assay  value    $13.00 

Loss  in  milling 1.60 

Yield 11.40 

Costs  mining  and  milling    7.00 

Profit  4.40 

Percentage  of  profit 34.00 

Smelting  ores  produced  by  the  Esperanza  in  1906  were: 

Value  per  ton $74.50 

Freight  treatment  and  deductions    $18.75 

Cost  of  mining  per  ton    5.00 

Total  cost 23.75 

Profit  50.75 

Percentage  of  profit 68.00 


352 


THE  COST  OF  MINING 


The  external  conditions  are  probably  about  average  for  gold 
mining.  The  wages  for  natives  are  low  and  their  labor  inefficient. 
Water-generated  electric  power  is  furnished  to  the  mine.  The 
El  Oro  company  owns  a  railroad,  timber  land,  and  a  sawmill, 
and  presumably  supplies  the  other  mines  as  well  as  its  own  with 
timber  and  transportation. 

The  walls  are  heavy,  and  where  broken  by  cross-faults  become 
very  soft.  Ordinarily  the  square-set  rooms  can  be  kept  open  to  a 
hight  of  40  to  50  ft.;  then  they  must  be  filled.  The  mines  are 
pretty  hot.  The  ore  while  forming  in  good-sized  bodies  is  sep- 
arated into  streaks  in  different  parts  of  the  shear  zone.  The 
development  of  these  requires  considerable  crosscutting  and 
drifting  along  the  intersected  streaks.  Work  is  also  done  on 
entirely  distinct  veins  separated  by  some  hundreds  of  feet  of 
waste.  The  experience  to  date  has  shown  the  requirements  in 
the  way  of  development  to  be  as  follows: 


Feet 

Tons  Mined 

Tons  Developed 

El  Oro  
Esperanza  

88,803 

60,640 

820,000 
875  000 

605,000 
142,000 

Total  

149,440 

1,695,000 

747,000 

About  one  foot  of  opening  work  to  16  tons  discovered. 
COSTS 


El  Oro 

Esperanza 

Tons  mined  
Tons  milled  '. 

1,080,788 
1  027  282 

450,000 
333,330 

Mining   

$1  99 

$280 

Development  

0.74 

0.80 

Milling  

077} 

Cyaniding 

1  11 

2.63 

Water  

002 

Other       .  . 

0  13 

General 

090 

1  08 

Construction  

036 

0.19 

Total 

$6  02 

$7  50 

QUARTZ-PYRITE   GOLD   MINES  353 

The  recovery  of  metals  at  the  two  mines  is  reported  for  1906-7 
as  follows: 


Gold 
Per  Cent. 

Silver 
Per  Cent. 

Total  Value 
Per  Cent. 

Esperanza  
El  Oro                                               

90.64 

90.28 

57.33 
68.55 

86.20 

86.63 

Costs  at  the  Esperanza  have  always  been  higher  than  at  the 
El  Oro  both  for  mining  and  milling.  There  is  nothing  in  the 
reports  to  explain  why  this  should  be  so. 

KOLAR  DISTRICT,  MYSORE,  INDIA 

In  Vol.  XXXIII,  Part  1,  of  the  "Memoirs  of  the  Geological 
Survey  of  India,"  F.  H.  Hatch  gives  an  excellent  practical  descrip- 
tion of  the  Kolar  mines  as  they  were  in  1900.  Since  that  time 
certain  changes  have  been  introduced,  notably  water-generated 
electric  power;  the  scale  of  operating  has  increased,  and  the  costs 
diminished,  but  no  specific  description  of  these  changes  has  come 
to  my  attention.  The  reports  of  the  various  companies  give 
abundant  information  about  output,  costs,  mine  developments, 
etc.  It  is  possible  that  something  might  be  changed  by  Mr. 
Hatch  if  the  descriptions  were  to  be  brought  down  to  the  present 
day,  but  on  the  whole  the  sources  of  information  are  satisfac- 
tory. One  feels  particularly  like  complimenting  Messrs.  John 
Taylor  &  Sons,  who  manage  most  of  the  mines,  on  their  com- 
plete and  detailed  annual  reports  to  their  stockholders. 

The  principal  mines  are  the  Mysore,  Champion  Reef,  Oore- 
gum,  and  Nundydroog:  other  mines  are  not  very  profitable. 
The  district  has  been  opened  since  1882.  The  output  has  been 
steadily  increasing,  but  the  maximum  seems  to  have  been 
reached.  The  climate  is  tropical;  the  rainfall  averages  30.13 
in.  per  year,  but  is  variable. 

This  Indian  gold-field  is  one  of  the  most  instructive  examples 
to  be  found  anywhere  in  studying  the  basic  principles  of  mine 
economics.  The  center  of  the  field  is  183  miles  from  the  impor- 
tant seaport  of  Madras;  the  freight  rate  for  various  articles  being 
as  follows  (presumably  per  long  ton) : 


354  THE  COST  OF  MINING 

Coal  in  carloads $1 .40 

Timber  less  than  17  ft.  long 1.90 

Timber  more  than  17  ft.  long    2.24 

Steel,  cast  iron  pipes,  machinery,  and  kerosene   3.40 

Wire  ropes  and  galvanized  iron  pipes    4.45 

Machinery  in  small  lots    5.87 

Explosives 16.67 

Indian  coal  is  delivered  at  the  mines  for  $6.50  per  ton;  Eng- 
lish coal  for  $9.75,  and  fire  wood  for  $2.56.  Ordinary  mining 
timber  costs  from  $20  to  $45  per  M.,  a  large  proportion  being  of 
the  more  expensive  kinds.  Dynamite  costs  about  27  cents  per 
pound  and  blasting  gelatin  (93  per  cent,  nitroglycerin)  35  cents. 
These  supplies,  it  will  be  observed,  are  all  more  expensive  than 
in  the  United  States  in  the  proportion  of  perhaps  two  to  one.* 

LABOR  AT  MYSORE 

When  we  come  to  labor  the  situation  is  interesting.  Men  are 
employed  in  the  following  proportions: 

Europeans 2.2  per  cent. 

Eurasians 1.6  per  cent. 

Natives    96.2  per  cent. 

I  have  no  means  of  computing,  except  approximately,  the 
average  wages  earned  by  three  classes.  Europeans  are  paid  by 
the  month,  on  contract  usually  for  three  years.  Transporta- 
tion is  provided  by  the  companies  to  and  from  Europe,  and 
quarters,  furniture,  fuel,  lights,  and  servants  also.  Men  laid 
up  by  sickness  draw  full  pay.  The  salaries  vary  from  $30  a 
month  for  some  of  the  miners  to  $100  for  smiths  and  machinists, 
and  $250  to  the  highest  paid  chemists  and  foremen.  Considering 
the  debilitating  effect  of  the  climate  and  the  loss  of  time  during 
illness,  voyages,  and  holidays,  it  does  not  seem  improbable  that 
the  work  done  by  these  men  costs  at  least  twice  as  much  as  work 
done  in  the  United  States  would  cost  if  done  by  men  paid  the 
same  wages.'  Indeed  I  believe  this  estimate  is  too  low. 

Wages  of  natives  are  as  follows  in  cents  per  day. 

Carpenters    12  to  50 

Smiths  8  to  48 

Timbermen 16  to  43 

Engine  drivers 20  to  33 


QUART2^PYRITE    GOLD    MINES  355 

Trackmen   20  to  41 

Gang  bosses  24  to  33 

Machine  men   20  to  33 

Hand  miners 16  to  24 

Blasters 16  to  24 

Landers 16  to  20 

Trammers 16  to  18 

Muckers    14  to  16 

Firemen    12  to  16 

Surface  coolies 8  to  12 

It  is,  of  course,  impossible  to  obtain  from  these  details  an  exact 
estimate  of  the  wages  paid,  but  on  the  assumption  that  the 
wages  of  miners  are  somewhere  near  the  average  for  natives  and 
that  Europeans  average  $5  a  day  including  expenses,  and  Eura- 
sians $2,  we  have: 

2.2  Europeans  at  $5  equals    $11.00 

1.6  Eurasians  at  $2  equals 3.20 

96.2  Natives  at  $0.23  equals    22.12 


100.0  $36.32 

This  means  an  average  wage  of  36  cents  or  thereabouts,  for 
all  employees. 

FACTORS  IN  MINING 

The  internal  factors  are  a  single  marvelously  persistent  quartz 
vein,  with  a  few  branches,  developed  for  a  length  of  17,500  ft. 
The  vein  occurs  in  a  belt  of  schists  which  I  suppose,  from  the 
presence  of  beds  of  quartzite,  are  undoubtedly  in  part  metamor- 
phosed sediments.  The  belt  seems  to  be  a  syncline,  but  it  is 
invaded  on  both  sides  by  intrusive  granites.  The  bulk  of  the 
schist  consists  of  altered  traps  or  lavas.  There  are  some  later 
dikes  of  a  basic  character.  The  vein  corresponds  both  in  strike 
and  dip,  which  is  about  50  to  55  degrees  west,  with  the  foliation 
of  the  schists.  The  ore  is  a  clean  quartz  containing  0.25  per 
cent,  of  pyrite.  The  quartz  occurs  in  a  number  of  shoots  along 
the  vein.  Some  of  the  shoots  occur  in  sharp  anticlinal  folds 
where  something  like  the  saddle  reefs  of  Bendigo,  Australia,  has 
been  developed  in  the  vein.  The  direction  of  other  ore  shoots 
along  the  plane  of  the  vein  seems  to  be  about  parallel  to  the  axes 
of  these  folds.  The  extent  of  the  shoots  is  variable;  some  of 
the  largest  are  known  to  be  more  than  4000  ft.  deep  along  the 
slope,  and  as  much  as  800  ft.  wide,  measured  at  right  angles  to 


356  THE  COST  OF  MINING 

the  long  axis.  It  is  difficult  to  ascertain  the  thickness  of  the 
vein  stoped;  the  average  is  probably  between  3  and  4  ft.  Tak- 
ing the  vein  at  large,  the  poor  with  the  good,  the  average  thick- 
ness of  mill  ore  developed  on  the  Mysore  property  in  1907  was 
1.8  ft. 

Although  these  mines,  particularly  the  Mysore,  are  looking 
exceedingly  well  in  the  bottom,  the  thickness  and  grade  of  the 
ore  show  some  diminution.  The  greatest  vertical  depth  reached 
is  about  2400  ft.  in  the  Edgar  shaft  of  the  Mysore.  In  earlier 
years,  when  the  mines  were  less  than  1000  ft.  deep,  vertically, 
the  ore  shoots  on  the  Mysore  and  Champion  Reef  mines  seem  to 
have  averaged  nearly  5  ft.  in  thickness. 

METHOD  OF  TREATMENT 

The  milling  practice  is  simple.  The  ore,  when  properly  sorted, 
yields  a  clean  quartz  with  very  little  clayey  matter  in  it.  The 
process  consists  of  amalgamation  in  a  stamp  battery  followed  by 
cyaniding  the  tailings.  A  special  cyanide  process  is  used  for 
the  comparatively  small  proportion  of  slimes.  The  only  dis- 
tinctive fact  is  that  the  crushing  duty  per  stamp  is  low,  being 
only  2.25  tons  per  day  per  1050-lb.  stamp.  The  pulp  is  put 
through  screens  averaging  about  1600  apertures  per  square  inch. 
The  low  stamp  duty  is  made  necessary  by  the  high  grade  of  the 
ore.  In  the  Transvaal  and  at  the  Treadwell  the  duty  per  day  is 
about  five  tons  per  stamp. 

A  few  years  ago  a  striking  and  uneconomical  feature  of  the 
metallurgical  practice  was  that  the  work  was  done  in  a  number 
of  small  mills  instead  of  in  a  central  large  one  on  each  property. 
This  bad  feature  has  been,  I  believe,  largely  corrected. 

It  will  be  seen  from  the  following  table  that  the  conditions 
and  costs  are  fairly  uniform  for  the  four  properties.  Conse- 
quently it  does  not  seem  worth  while  to  give  details  for  more 
than  one. 

For  this  purpose  the  Mysore  mine  serves  excellently.  It  is 
an  extraordinarily  good  and  profitable  property,  situated  at  the 
south  end  of  the  district  and  covering  7700  ft.  along  the  lode. 
It  is  developed  to  an  extreme  vertical  depth  of  2600  ft.,  equal  to 
4000  ft.  along  the  incline.  The  ore  is  derived  from  three  indepen- 
dent shoots  of  which  the  central  one  is  the  more  prominent,  but 
all  three  have  proved  persistent  to  the  lowest  workings.  In 


QUARTZ-PYRITE   GOLD   MINES 


357 


OUTPUT  AND  VALUATION  OF  ORE  PRODUCED  BY  THE  FOUR  PRINCIPAL  MINES 
OF  THE  KOLAR  DISTRICT  OF  INDIA  REDUCED  TO  SHORT  TONS  AND  AMERI- 
CAN CURRENCY. 


Name  and 
Date 

Tons 
Mined 

Tons  Ore 
in  Sight 

Yield  from 
Ore  Mined 

Average 
Ton 

Dividends 

Average 
Divi- 
dends 
per  Ton 

Cost 
Ton 

Mysore 

1884-1898 

2,484,562 

1,085,000 

$52,624,000 

$21.18 

$27,252,000 

$10.96 

$9.22 

Champion 

Reef 

1892-1908 

2,130,748 

— 

40,340,000 

19.00 

17,148,000 

8.05 

10.95 

Nundyroog 

1888-1908 

1,029,700 

133,000 

17,763,000 

17.24 

7,163,000 

6.96 

10.28 

Ooregum 

1888-1908 

1,660,781 

172,000 

23,580,000 

14.20 

7,852,000 

4.74 

9.46 

Four  mines 

1884-1908 

7,305,791 

1,388,000 

$134,300,000 

18.40 

59,655,000 

8.18 

10.22 

NOTE.  —  There  is  reason  to  believe  that  the  dividends  are  larger  than  the 
real  profits  because  they  include  sums  obtained  from  stockholders,  for  pre- 
miums and  new  stock  issued  to  cover  new  construction  and  developments. 
This  practice,  however,  has  now  been  stopped  and  it  may  be  that  the  costs 
estimated  are  not  far  from  the  truth,  on  the  theory  that  the  money  hereto- 
fore spent  on  plant  will  serve  for  the  future  operation  of  the  mines,  or  at  least 
for  the  ore  in  sight. 


1907  the  record  was  as  follows,  expressed   in  short   tons   and 
American  currency: 

Currency 

Tons  mined  and  treated   233,825 

Assay  value  of  ore $20.00 

Yield  of  ore 17.12 

Loss  in  milling 2.88 

Extraction  in  mill    85.51  per  cent. 

Costs 
per  Ton 

Plant  and  equipment,  including  a  proportion 
of    the    development    work,     average    for 

eleven  years $1.87 

Administration 20 

Mining 4.68 

Milling 63 

Cyaniding  tailings    23 

Repairs  to  buildings,  machinery,  and  plant    . .        .90 


358  THE  COST  OF  MINING 

Costs 
per  Ton 

Surface  costs 10 

Pumping  charges 05 

Transport  and  insurance  of  gold 15 

Kolar  Central  Metallurgical  Establishment  ...        .01 

Medical  Establishment 04 

Survey  department 01 

Police  and  detective  force    01 

Traveling  expenses  of  employees 04 

Kolar  Gold  Field  Electricity  Department 01 

Telegrams,  postages,  and  incidental  expenses 

in  India 02 

Directors'  fees 11 

Salaries  and  bonuses  to  managers  and  clerks.  .        .15 

Telegrams,  postage,  stationery,  etc 03 

Total    costs    equalizing    small    differences    in 

details       9.25 

Net  profit  per  ton 7.87 

Profit  on  gross  value  of  ore  mined    39  per  cent. 

Total  costs  and  losses 12.13 

A  QUESTION  OP  BOOKKEEPING 

To  charge  improvements  to  capital  account,  even  if  they  are 
absolutely  new,  is  a  bookkeeping  error  into  which  nearly  all 
mining  companies  fall.  This  error  is,  of  course,  in  most  cases 
theoretically  rectified  by  writing  off  a  certain  amount  of  depre- 
ciation. While  in  the  case  of  these  Kolar  mines  it  appears  that 
the  depreciation  has  kept  pace  with  the  increase  of  capital  (for 
eleven  years  the  Mysore  company  received  from  stockholders 
about  £60,000  a  year) ,  this  does  not  alter  the  fact  that  the  money 
thus  written  off  did  not  come  out  of  the  mine.  To  some  extent, 
of  course,  the  money  thus  provided  was  used  to  make  a  real 
increase  in  the  company's  resources,  and  to  this  extent  it  will  be 
paid  back  in  the  shape  of  increased  profits,  or  lower  costs,  in 
later  years.  But  it  should  never  be  forgotten  for  a  moment 
that  there  is  always  some  work  going  on  about  a  mine  in  the 
shape  of  permanent  improvements,  and  that  for  a  period  of  years 
the  average  amount  thus  expended  should  not  be  written  off  the 
balance  sheet;  it  should  be  charged  to  operating.  To  pay  operat- 
ing expenses  out  of  new  capital  is  either  a  fraud  or  a  bookkeep- 
ing sophistry.  It  is  always  a  mistake  more  or  less  complete. 
It  may  be  partly  justified  but  never  wholly. 

The  accompanying  table  prepared  by  Mr.  Hatch  shows  the 
distribution  of  costs  for  the  year  1899.  These  costs  are  a  little 


QUARTZ-PYRITE   GOLD  MINES  359 

higher  than  the  average,  but  not  so  much  as  to  give  a  seriously 
false  impression. 

Within  the  past  year  or  two  considerable  economy  has  been 
effected  by  the  introduction  of  water-generated  electric  power 
from  the  Cauvery  falls.  In  1899  steam  power  cost  $150  per 
horse-power  year  and  the  cost  per  ton  for  the  power  used  was  more 
than  $3.  Electric  power  is  now  furnished  for  $90  a  year,  reduc- 
ing the  power  cost  more  than  $1  per  ton. 

I  will  not  go  into  details  regarding  all  the  mines,  but  will 
give  some  further  facts  regarding  the  Mysore,  the  largest  and 
best  mine  in  the  district.  This  property  in  the  years  1902-1907, 
inclusive,  did  163,691  ft.  of  development  work,  mined  and  milled 
1,210,000  tons  of  ore,  and  increased  its  reserves  from  380,800 
tons  to  1,012,480  tons.  The  actual  ore  developed  during  the 
period  was  1,841,500  tons,  being  a  trifle  more  than  11  tons  per 
foot  of  development  work.  This  development  with  approximate 
costs  was  made  up  as  follows: 

Drifts  and  crosscuts,  117,912  ft.  at  $10  equals $1,179,120 

Raises,  24,041  ft.  at  $40  equals 960,000 

Winzes,  12,291  ft.  at  $40  equals 490,000 

Shafts,  9,447  ft.  at  $100  equals 944,700 

Total    .' $3,574,000 

The  costs  are  approximations  from  Hatch's  report. 

HIGH   DEVELOPMENT  COST 

If  these  costs  are  anywhere  near  the  actual,  and  I  believe 
that  they  are,  we-  have  an  average  cost  per  ton  developed  of 
about  $1.94  and  per  ton  milled  of  $2.95. 

In  the  abstract  of  Hatch's  figures  for  various  kinds  of  work  it 
is  to  be  observed  that  the  development  accounts  for -about  half 
the  cost  of  mining.  In  this  connection,  however,  it  is  well  to 
point  out  that  a  considerable  portion  of  the  development  work 
does  not  appear  in  the  working  costs,  but  is  charged  to  capital 
account.  The  only  place  where  this  expenditure  appears  is  in 
the  balance  sheet  where  certain  sums  are  "  written  off "  for  depre- 
ciation, etc.  These  sums  amount  in  six  years  to  $2,122,000  on 
machinery,  plant,  etc.  Of  this  a  good  deal  must  represent  the 
cost  and  equipment  of  Edgar's  and  other  shafts. 

To  show  how  this  bookkeeping  works,  let  us  take  the  revenue 


360 


THE  COST  OF  MINING 


account  for  the  year  1907.  Here  we  find  that  administration 
and  working  costs,  including  directors'  fees,  insurance,  and  all 
general  expenses,  amount  to  $8  per  ton.  To  this  we  must  add 
from  the  balance  sheet,  in  order  to  get  the  management's  real 
estimate  of  the  costs,  the  sum  of  $1.76  per  ton  for  depreciation, 
this  being  the  average  for  the  last  six  years.  With  this  addition 
the  total  cost  is  $9.76.  This,  it  will  be  observed,  is  very  close, 
both  to  Mr.  Hatch's  figures  in  1899,  and  to  my  own  estimate 
based  on  the  output  and  dividends. 
Mr.  Hatch  comments  as  follows: 


COSTS  AT  THE  MINES  OF  MYSORE  IN  1899,  ACCORDING  TO  HATCH 


Mysore 

Champion 
Reef 

Ooregum 

Nundy- 
droog 

Balaghat 

Coronadel 

Mine  costs         

$5.79 

$7.15 

$7.02 

$12.12 

$4.87 

Mill 

1.28 

1.68 

1.41 

1.41 

1.60 

Wheeler  pans    
Cyanide    
Administration   .... 

0.69 
0.28 

0.69 
0.89 
0.27 

$9.46 
0.44 

0.21 
0.75 
0.51 

0.50 
0.79 

0.47 
0.76 

General  charges    .  .  . 

0.75 

0.61 

0.49 

0.48 

0.31 

0.49 

Total  

$8.79 

$11.29 

$10.39 

$10.38 

$15.13 

$8.19 

Royalty  on  gold  ore 
Depreciation  

1.58 
0.41 

1.51 
0.26 

0.86 
0.14 

1.12 
0.40 

0.63 
2.20 

0.21 
0.50 

London  office    

0.39 

0.30 

0.33 

0.65 

0.88 

0.74 

Grand  total  

$11.17 

$13.36 

$11.72 

$12.55 

$18.84 

$9.64 

Reduced     to     short 

tons  

$10.00 

$11.93 

$10.47 

$11.21 

$16.82 

$8.61 

"The  working  costs  are  high,  but  there  is  not  much  difficulty 
in  accounting  for  this.  First,  the  nature  of  the  ore  deposit  dic- 
tates a  high  cost  of  working,  as,  for  instance,  the  occurrence  of 
the  pay-ore  in  shoots,  which,  though  of  high  grade,  are  of  com- 
paratively limited  extent.  This  leads  to  a  heavy  expenditure  in 
development,  as  much  sinking,  driving,  and  crosscutting  must 
be  done  in  waste  rock  in  order  to  open  up  pay  or  shoot  ore.  The 
cost  of  this  development  work  is  included  in  the  figures  given  for 
working  costs.  Then  again  the  heaviness  or  instability  of  the 
ground  in  parts  of  the  mines  necessitates  a  big  expenditure  on 
timber  to  secure  the  stopes,  shafts,  and  levels. 


QUARTZ-PYRITE   GOLD  MINES  361 

COST  AND  GRADE  OF  ORE 

"  Further,  it  must  not  be  forgotten  that  the  cost  of  working 
a  high-grade  ore  is  of  necessity  greater  than  that  of  a  low-grade 
ore,  and  the  reason  for  this  is  plain.  In  mining  low-grade  stuff 
the  main  object  is  to  obtain  a  large  tonnage  at  a  low  cost;  con- 
sequently the  stopes  are  carried  as  wide  as  possible  and  the  whole 
mass  of  the  orebody  is,  as  a  rule,  exploited,  the  exploratory  or 
dead  work  being  at  a  minimum.  With  high-grade  stuff,  on  the 
other  hand,  the  stopes  are  kept  as  narrow  as  possible,  and  great 
care  is  exercised  only  to  extract  the  payable  portions  of  the  ore- 
body.  Much  exploratory  work  in  waste  rock  is,  therefore, 
necessary  in  order  to  locate  the  pay  ore.  Similar  factors  influ- 
ence the  metallurgical  treatment.  With  low-grade  stuff  the 
ore  is  passed  quickly  through  the  mill,  a  high  stamp  duty  being 
maintained  by  the  use  of  coarse  screening  and  a  low  discharge, 
and  the  cyanide  process  is  relied  upon  to  catch  the  gold  that 
escapes  amalgamation.  Whereas  with  high-grade  ore  the  usual 
practice  is  to  crush  fine,  and  to  catch  as  high  a  percentage  of  the 
gold  as  possible  by  amalgamation. 

"For  these  reasons  it  is  impossible  to  compare  the  working 
costs  of  high-grade  mines,  such  as  those  at  Kolar,  with  the  low- 
grade  mines  of  other  countries,  as,  for  instance,  those  of  the  Wit- 
watersrand  in  the  Transvaal.  At  the  same  time,  it  must  be 
admitted  that  a  reduction  in  working  expenses  at  Kolar  could  no 
doubt  be  effected  by  improvements  in  milling  plant,  and  by  the 
substitution  of  automatic  mechanical  means  for  native  labor  in 
the  handling  of  the  ore  delivered  at  the  shaft  top,  and  of  the 
tailings  leaving  the  mill.  The  substitution  of  a  large  centrally- 
placed  mill  with  heavy  stamps  for  several  small  and  scattered 
mills  with  light  stamps,  which  at  the  present  moment  is  being 
carried  out  on  the  Champion  Reef,  and  is  in  anticipation  at  Oore- 
gum,  will  decrease  the  cost  of  milling  at  these  mines.  The  intro- 
duction of  mechanical  haulage,  automatic  sorting  tables,  tailings, 
wheels  for  elevating  the  tailings,  and  pointed  boxes  for.  classify- 
ing and  filling  directly  into  the  cyanide  vats,  all  these  improve- 
ments would  no  doubt  have  a  similar  effect.  So  also  will  the 
introduction  of  water  power  transmitted  by  electric  current,  as 
it  is  proposed  to  do  by  the  Cauvery  power  scheme." 


362 


THE  COST  OF  MINING 


DETAILS  OF  DEVELOPMENT  COSTS,  HATCH 
COST  OF  RAISING  (10x5  FT.)  15.6  FT.  PER  MONTH 

Labor,  white $8.25 

Labor,  native 4.50 

Explosives 6.25 

Supplies 4.90 

Compressed  air 21.00 


$44.90 
COST  OF  DRIVING 

Hand $9  per  ft.,  rate  15  ft.  per  month. 

Machine $11  per  ft.,  rate  30  to  35  ft.  per 

month. 
Stoping  in  4Wt.  vein  without  timbering  costs  about  $1.25  per  ton. 

COST  PER  FOOT  OF  SHAFT-SINKING  IN  KOLAR  GOLDFIELDS 


Nundydroog 
12x6  ft. 

Oakleys' 
16x8  ft. 

Champion 
Reef 
16x8  ft. 

Edgar's 
Mysore 
circ'r  18  ft. 

Labor                       

$31.27 

$32.68 

Timber 

788 

25.22 

Explosives  and  supplies    .... 
Compressed  air 

13.40 
32.84 

24.20 
33.88 

— 

— 

Hoisting    
Drill  sharpening  

10.93 
0.49 

4.84 

— 

— 

Speed  per  month    

$96.81 
15ft. 

$120.82 
25ft. 

$145.91 

28ft. 

$120 
20ft. 

Equivalent  work  in  the  United  States  may  be  estimated  as 
follows: 

Sinking  large   working   shafts    (Lake    Superior,    Butte,    Coeur 
d'Alene,   or  Cripple   Creek),   average   rate  per  month  50 

ft.,  cost  per  ft $100 

Raising  with  complete  timbering,  10x6  ft 25 

Drifting  in  average  ground,  5x8  ft 9 

WAGES  AND  COST  OF  LABOR 

I  have  given  many  details  about  the  Kolar  mines  because  I 
wish  to  illustrate  the  extraordinary  lack  of  correspondence  between 
the  wages  paid  and  the  costs.  There  does  not  seem  to  be  any 
detail  in  which  work  at  these  mines  is  done  cheaper  than  in  the 
United  States.  In  Cripple  Creek,  or  Butte,  or  the  Coeur  d'Alene, 
where  wages  average  ten  times  as  high  as  at  Kolar,  work  can  be 


QUARTZ-PYRITE  GOLD  MINES  363 

done  just  as  cheaply.  This  is  true  of  drifting,  of  crosscutting, 
of  raising,  of  shaft  sinking,  of  stoping,  of  everything  on  which  I 
can  find  data  for  comparison. 

It  is  true  that  supplies  cost  more  than  in  the  United  States; 
nevertheless  out  of  working  costs  of  $8.96  per  ton  I  find  that 
labor  must  account  for  about  $5.50  or  60  per  cent.  This  is  the 
usual  proportion  in  the  United  States.  We  find  that  the  num- 
ber of  men  employed  to  mine  and  mill  217,770  tons  of  rock  in 
1907  at  the  Mysore  mine  was  8334  or  26  tons  per  man  per  year. 
At  the  Camp  Bird  mine  in  Colorado,  where  external  conditions 
are  unfavorable,  the  ore  being  of  higher  grade  and  the  costs  nearly 
the  same,  the  wages  are  ten  times  as  high  and  the  output  per 
man  ten  times  as  great. 

It  is  inconceivable  to  me  that  the  energy  expended  by  a  miner 
in  Colorado  is  ten  times  as  great  as  that  expended  by  the  Indian 
miner.  The  true  explanation  of  the  wonderful  difference  in 
performance  lies  in  the  industrial  efficiency  of  the  community  by 
which  the  men  are  surrounded. 

WlTWATERSRAND 

The  great  gold-mining  field,  Witwatersrand,  produces  one- 
third  of  the  world's  annual  yield  of  gold,  and  is  so  well  known 
to  the  mining  public,  and  even  to  the  public  at  large,  that  any 
general  description  of  it,  other  than  such  as  will  serve  my  pur- 
pose of  illustrating  the  factors  governing  the  cost  of  mining,  is 
unnecessary. 

The  occurrence  of  the  ores  here  bears  a  resemblance  to  that 
of  two  important  districts  described  elsewhere,  i.e.,  to  the  cop- 
per conglomerates  of  Lake  Superior  and  to  the  Kolar  mines  in 
India.  Like  the  Calumet  conglomerate  the  banket  beds  of  the 
Transvaal  are  mineralized  sedimentary  beds,  and  the  value  of 
the  material  worked  is  not  far  from  equivalent,  but  the  "Rand" 
beds  are  thinner,  more  persistent,  and  workable  over  much  greater 
areas.  The  Kolar  mines,  while  on  a  vein  of  different  geological 
origin  and  producing  ores  of  much  higher  value,  bear  a  consider- 
able resemblance  in  the  persistence  and  abundance  of  the  min- 
eralization. 

Two  recent  papers  by  distinguished  American  engineers 
throw  excellent  light  on  the  present  condition  of  the  industry. 
Ross  E.  Browne  has  written  an  exhaustive  discussion  of  "  Work- 


364  THE  COST  OF  MINING 

ing  Costs  on  the  Mines  of  the  Witwatersrand "  (republished  in 
the  Mining  Journal  of  London,  in  the  issues  of  July,  1907)  and 
Thomas  H.  Leggett  (Trans.  A.  I.  M.  E.,  February,  1908), 
describes  the  "Present  Mining  Conditions  on  the  Rand." 

Mr.  Browne  sizes  up  average  conditions  for  the  whole  district 
as  follows: 

Per  Ton 
Milled 

Working  cost    , $5.85 

Capital  redemption    1.22 

Total  expense $7.07 

Yield      8.71 

Profit 1.64 

By  capital  redemption,  I  suppose,  Mr.  Browne  means  all  cap- 
ital, including  probably  large  sums  paid  for  mining  claims.  By 
the  theory  of  costs  used  in  this  article  such  sums  are  profits  paid 
to  somebody  by  the  working  of  ore  from  the  land  and  are  not, 
therefore,  costs.  Accordingly,  Mr.  Browne's  estimate  of  the  cost 
of  capital  redemption  is  somewhat  high. 

A  summary  of  the  record  of  the  Witwatersrand  is  as  follows: 

Tons  milled  (1884-1908)    113,600,000 

Value  recovered $1,049,000,000.00 

Dividends  paid 273,655,000.00 

Yield  per  ton    $9.23 

Dividends  per  ton    2.41 

Cost  per  ton 6.82 

In  1908  the  figures  were  as  follows: 

Tons  milled 18,000,000 

Value  recovered   $144,600,000.00 

Dividends  paid 41,800,000.00 

Yield  per  ton    8.03 

Dividends  per  ton    2.30 

Cost  per  ton    5.73 

It  is  probable  that  the  dividends  in  these  tables  include  sums 
that  should  properly  be  charged  to  redemption  of  capital,  i.e., 
amortization  of  plants,  and  that  the  costs  should  be  estimated 
a  little  higher.  On  the  other  hand,  it  is  certain  that  these  costs 
include  all  current  construction,  or  depreciation  charges,  and  are 
a  much  better  exhibit  of  the  real  dividend  costs  than  the  "  work- 
ing costs  "  ordinarily  published.  Almost  all  the  production  comes 
from  dividend-paying  mines. 


QUARTZ-PYRITE  GOLD  MINES  365 

On  nine  representative  mines  in  the  district  Mr.  Browne  finds 
the  following  average  working  conditions: 

Number  of  stamps  operating Ill 

Working  costs  per  ton  milled    $5.19 

Percentage  rejected  by  sorting  (probably  at  sur- 
face only)    13 

Ratio  of  tons  developed  to  tons  mined    0.90 

Width  (thickness)  of  stopes  in  inches    69 

Continuity  of  reefs,  normal  for  the  Rand,  unrivaled  elsewhere. 

Average  depth  of  mining  in  feet 1200 

Dip  of  reef    30 


Hardness  of  ground,  solid  quartzite  and  slate. 

Cost  of  timber  per  ton  of  ore  mined 4  cents 

Cost  of  coal  per  ton  delivered  at  plant    $3.41 

Gallons  of  water  pumped  from  mine  per  ton  of 

ore  milled    313 

Duty  of  stamp,  tons  milled  per  24  hours 4.85 

With  the  above  average  conditions  the  average  costs  are  as 
follows: 

Development  cost  per  ton    $0.37 

Other  mining  costs    2.63 

Total  cost  per  ton  hoisted    $3.00 

Milling,  crushing,  and  amalgamating  0.69 

Cyaniding   0.64 

General  expense  at  mines 0.25 

General  expense  at  head  office    0.18 

Total    $4.76 

These  figures  represent  the  costs  as  they  would  be  if  all  the 
ore  hoisted  were  milled,  but  as  13  per  cent,  is  rejected  by  sort- 
ing, the  cost  as  divided  by  the  tonnage  actually  milled  is  brought 
up  to  $5.19. 

A  COMPARISON  OF  RECORDS 

I  cannot  believe  that  these  figures  make  a  disadvantageous 
comparison  with  costs  of  similar  operations  elsewhere.  This 
opinion  is  somewhat  at  variance  with  the  general  idea  among 
mining  men,  and,  as  I  have  never  been  in  South  Africa,  it  is 
perhaps  well  to  explain  that  I  am  going  wholly  upon  the  consid- 
eration of  the  basic  principles  involved. 

Mr.  Browne  sees  hope  of  reducing  costs  to  about  $3.75  per 
ton  by  increasing  the  efficiency  of  white  labor,  by  better  direction 


366  THE  COST  OF  MINING 

of  colored  labor,  and  by  reducing  the  cost  of  supplies.  With 
this  hope  I  certainly  have  no  quarrel  and  it  is  probably  not  alto- 
gether extravagant.  Considerable  improvements  are  brought 
about  by  necessity  and  by  long-continued  effort.  As  the  grade 
of  ore  diminishes  the  cost  is  inevitably  diminished  by  the  simple 
process,  among  other  things,  of  refusing  to  work  ores  that  pre- 
sent difficulties  beyond  a  certain  limit.  But  as  a  matter  of  prac- 
tical experience,  taking  into  consideration  all  the  ins  and  outs, 
good  luck,  and  bad  accidents,  it  seems  to  me  that  the  performance 
of  the  Rand  mines  is  fully  as  good  as  that  of  other  mines. 

To  judge  better  of  this  let  us  look  up  the  life  history  of  the 
greatest  of  the  Transvaal  mines,  the  Robinson,  and  see  how  it 
compares  with  other  great  mines  of  which  we  have  the  records. 

ROBINSON  GOLD  MINING  COMPANY,  TO  END  OF  1906 

Tons  milled 2,657,768 

Total  value,  $46,535,000 Per  ton,          $17.50 

Working  cost  per  ton    6.36 

Construction  and  improvements 0.78 

Total  cost  per  ton  milled    7.14 

Profit  $27,680,000    Per  ton,  10.36 

Dividends  and  cash  in  profit  and  loss    24,219,000 

Real  estate,  securities,  and  cash  on  loan  3,461,000 

Nearly  60  per  cent,  of  the  entire  gross  revenue  is  shown  as 
clear  profit.  Few  mines  of  this  grade  can  equal  this  showing  of 
costs. 

It  would  be  an  exceedingly  laborious  compilation  to  get  the 
average  costs  in  detail,  so  I  shall  content  myself  with  giving  the 
details  in  a  year  of  which  the  costs  approximate  the  average. 
Such  a  year  is  1897  when  the  total  cost  was  $6.90  divided  between 
working  cost  at  $6.65  and  construction  at  $0.25.  In  this  year 
the  tonnage  hoisted  was  203,597  of  which  23,197  was  sorted  out 
on  the  surface.  In  addition  the  amount  sorted  out  underground 
was  estimated  at  60,000  tons,  making  the  total  stoped  about 
263,500  tons.  Since  the  sorting  out  of  this  waste  underground 
serves  no  useful  purpose  in  protecting  the  safety  of  the  work- 
ings, it  was  sorted  out  entirely  to  avoid  the  expense  of  milling. 
It  is  probable  that  the  sorting  on  the  surface  and  stowing  of  waste 
underground  cost  fully  as  much  as  the  tramming  of  ore  for  the 
mill.  For  comparing  the  work  done  here  with  certain  other 
mines  it  is  necessary  to  make  these  corrections. 


QUARTZ-PYRITE  GOLD   MINES 


367 


MINING  COSTS,  ROBINSON  GOLD  MINING  COMPANY 

Tons  Per  Ton 

263,500  stoped $443,694     $1.68 


263,500  trammed 21,882 

203,597  hoisted 19,671 

263,500  mine  maintenance  and  pumping 47,306 

320,000  developed 178,334 


1.08 
0.10 
0.18 
0.56 

$2.60 


These  figures  are  as  low  as  those  of  the  Portland  mine  at 
Cripple  Creek,  figured  on  the  same  basis;  they  are  not  far  above 
those  of  the  Tamarack,  or  the  Calumet  &  Hecla,  where  the  vol- 
ume of  material  in  the  same  area  is  more  than  double,  and  lower 
than  equivalent  work  in  the  Mysore  mine.  It  is  to  be  remem- 
bered that  the  mining  is  done  at  the  Robinson  on  two  beds,  the 
Main  Reef  Leader  of  a  payable  width  of  18  in.  and  the  South 
Reef  of  a  payable  width  of  42  in.,  on  which  there  is  not  room 
for  working.  The  effort  is  to  carry  the  stopes  as  narrow  as 
possible. 

MILLING  COSTS 


Tons 

Total 

Per  Ton 

Crushing  and 
Transport  to 
Milling  and  n 
Power 

sorting    
mill    
laintenance 

203,597 
180,400 

$18,134 
5,465 
78,548 
40,094 

$0.09 
0.03 

0.43 
0.22 

$0.77 

SECONDARY  TREATMENT 

Vanning,  concentration    

Cyaniding,  chlorination    


14,966 
126,470 


Total  treatment  . 


$0.07 
0.70 

$0.77 
1.54 


Here  we  have  ore  worth  $20  a  ton  treated  with  an  extraction 
of  89.3  per  cent,  at  a  cost  that  seems  low  enough.  A  certain 
correspondence  obtains  here  as  elsewhere  between  the  value  of 
ore  treated  and  the  cost  of  treatment,  even  by  the  same  process. 


368  THE  COST  OF  MINING 

ROBINSON,  GENERAL  EXPENSE,  263,500  TONS 


Total 

Per  Ton 

General  maintenance  

$21,071 

$008 

General  charges    

73918 

028 

Machinery,  plant,  and  buildings.  .    . 

95  716 

0  36 

Special  charges 

23  531 

0  OQ 

Construction  

46038 

0  18 

$0.99 

If  all  the  rock  broken,  therefore,  were  treated,  we  should  find 
the  following  comparison  with  the  costs  as  given: 


Per  Ton  Milled 
(as  given) 

Per  Ton  Mined 

Mining                     

$3.90 

$2.60 

Treatment                           

1.57 

1  54 

General  expense 

1  18 

0  81 

Construction         

0.25 

0  18 

$6.90 

$5.13 

The  gradual  diminution  both  of  costs  and  the  grade  of  ore  is 
shown  as  follows: 


Yield  per  Ton 

Working  Costs 
per  Ton 

1890                                                  

$46.20 

$10.02 

1906                 

13.84 

5.30 

At  the  end  of  1906,  2,180,000  tons  of  ore  were  blocked  out, 
of  which  the  development  had  been  paid  for  by  mining  opera- 
tions to  date.  The  average  assay  value  of  the  reserves  was 
$14.50  per  ton,  and  the  extraction  being  realized  was  93  per 
cent.;  so  that  a  net  yield  of  $13.50  can  be  expected.  It  seems 
plain  from  the  steady  reduction  of  costs  that  these  reserves  can 
be  mined  for  all  working  and  construction  costs  for  $5  a  ton, 
leaving  a  net  profit  of  $8.50  per  ton,  or  $18,500,000. 


QUARTZ-PYRITE  GOLD   MINES  369 

NOT  A  RECORD  OF  EXTRAVAGANCE  AND  CARELESSNESS 

I  feel  that  this  record  of  the  Robinson  mine  shows,  in  a  gen- 
eral way,  the  achievements  and  tendencies  of  the  Rand  industry; 
and  that  it  is  a  monument,  not  of  extravagance  and  careless- 
ness, but  of  excellent  engineering  and  of  broad-gaged  and  honest 
management. 

With  this  view  of  the  cost  problem  on  the  Rand,  Thomas  H. 
Leggett  is  in  full  accord.  I  quote  from  his  paper  on  the  "  Present 
Mining  Conditions  on  the  Rand,"  as  follows: 

"  As  the  mining  camp  grows  older  the  working  costs  almost 
invariably  decrease,  providing  the  camp  maintains  a  healthful 
activity  with  advancing  years,  and  this  has  been  the  case  on  the 
Witwatersrand,  the  result  being  as  follows: 

1898,  average  working  costs  of  65  companies 25s.  1. 3d. 

1899,  average  working  costs  of  42a  companies 25s.  2.7d. 

1906,  average  working  costs  of  58  companies 22s.  l.Qd. 

1907,  average  working  costs  of  566  companies 20s.  S.Qd. 

a  The  Boer  war  broke  out  in  October,  hence  the  records  are  incom- 
plete. 

b  Two  less  than  in  1906,  due  to  exhaustion  of  the  Bonanza  mine  and 
incomplete  records  from  one  other  mine. 

"These  costs  include  mining,  development,  crushing,  and 
sorting,  milling,  cyaniding,  maintenance,  and  general  expense, 
but  they  do  not  cover  depreciation  and  amortization,  these 
items  being  more  properly  dealt  with  by  the  directors  at  the  end 
of  the  year.  These  results  show  the  very  material  decrease  of 
4s.  6d.  per  ton  since  1899,  and  are,  therefore,  approaching  now 
to  the  6s.  reduction  predicted  by  John  Hays  Hammond  in  1901, 
but  it  has  taken  time  to  attain  this  result,  as  I  then  pointed 
out  it  would  do.  A  comparison  of  the  costs  in  1907  with  those 
of  1906  shows  a  decrease  of  Is.  5d.,  or  34  cents  per  ton,  due 
chiefly  to  decreased  wages  and  increased  efficiency  of  both  white 
and  colored  labor,  including  the  Chinese  in  the  latter  category, 
though  increased  crushing  capacity  through  the  use  of  heavier 
stamps  (up  to  1670  Ib.  per  stamp)  and  regrinding  in  tube  mills 
have  also  aided. 

"In  1906  fifty-eight  companies  mined  and  milled  13,065,624 
tons  of  ore  at  a  total  cost  of  £14,411,219,  while  in  1907  fifty- 
six  companies  milled  and  mined  14,861,234  tons  at  a  total  cost 


370  THE  COST  OF  MINING 

of  £15,351,749,  being  an  increase  of  1,795,610  tons  for  an  increased 
cost  of  only  £940,530. 

"  Most  of  these  economics  were  attained  during  the  latter  half 
of  1907,  after  the  white  miners'  strike,  and  some  mines  made  start- 
ling reductions,  as,  for  instance,  the  Robinson,  which  reported 
costs  of  14s.  9d.  for  November,  and  the  Glencairn,  of  15s.  Id.  per 
ton. 

"  Such  strenuous  and  successful  efforts  are  now  being  made  to 
reduce  still  more  the  working  costs  on  the  Rand,  that  I  think  it 
safe  to  anticipate  another  large  decrease  for  the  year  1908." 

LABOR  COST  NOT  EXCESSIVE 

I  have  expressed  the  opinion  that  costs  on  the  Rand  are  not 
essentially  different  from  those  that  would  be  obtained  were  the 
properties  situated  in  the  United  States.  What  about  wages? 
The  only  direct  information  I  have  is  the  statement  of  Mr.  Browne 
that  whites  average  $4.60  a  day  and  colored  laborers  $0.66  per 
day,  and  are  employed  in  the  proportion  of  9.2  colored  men 
to  one  white  man. 

Average  wages  about  $1.18  per  day;  as  the  percentage  of 
colored  men  varies,  so  the  average  wages  will  vary  from  time  to 
time. 

In  my  judgment  the  figures  demonstrate  that  the  Rand  is 
another  proof  of  the  fact  that  the  rate  of  wages  does  not  deter- 
mine the  cost  of  labor.  Criticism  of  the  Rand  has  been  to  the 
effect  that  costs  are  higher  there  than  in  the  United  States.  Mr. 
Browne  believes  that  California  labor  paid  California  prices  on 
the  Rand  would  be  cheaper  than  the  labor  actually  employed  by 
about  15  per  cent.  In  California  wages  are  approximately  $3 
per  day.  I  have  estimated  average  development  costs  at  vari- 
ous places  as  follows: 

Per  Foot 

Rand,  average  for  shafts,  drifts,  raises,  etc $20 

Kolar,  average  for  shafts,  drifts,  raises,  etc 22 

Cripple  Creek,  average  for  shafts,  drifts,  raises,  etc.    14 

WAGES 

Per  Day 

Rand   $1.18 

Kolar 0.36 

Cripple  Creek   3.40 

An  exact  comparison  cannot  be  made,  because  the  rocks  and 


QUARTZ-PYRITE   GOLD   MINES  371 

conditions  are  different.  In  the  Rand  the  rock  is  harder  than  at 
Cripple  Creek,  and  the  openings  probably  average  larger,  but  on 
the  other  hand,  there  is  less  water  to  pump. 

EFFIENCY  OF  LABOR  A  FUNCTION  OF  THE  COST 

The  point  I  am  seeking  especially  to  bring  out  is  that  criti- 
cism has  been  applied  to  the  inefficiency  of  Rand  labor  as  if  it 
were  a  special  case,  and  that  because  wages  average  low  on  the 
Rand  costs  ought  to  be  correspondingly  low.  I  contend  that 
this  assumption,  if  carried  beyond  certain  narrow  limits,  is  an 
incorrect  one,  and  if  established  it  would  be  in  opposition  to  a 
general  economic  law. 

President  Roosevelt's  great  work  has  often  been  called  a 
reaffirmation  of  the  Decalogue.  I  am  afraid  that  the  conclu- 
sions I  have  arrived  at  are  of  the  same  class.  You  will  remem- 
ber the  scriptural  phrase,  "The  laborer  is  worthy  of  his  hire," 
and  the  common  proverb  that  the  "  Workman  is  known  by  his 
tools."  These  statements  contain  the  essence  of  the  problem 
of  the  cost  of  labor,  always  the  fundamental  and  final  element 
in  the  cost  of  anything.  The  gist  of  the  whole  subject  was  tersely 
stated  by  the  first  Lord  Brassey,  the  great  English  contractor, 
who  said  that  the  same  work  costs  the  same  money  anywhere 
regardless  of  the  price  of  wages.  The  workman,  the  tools,  and 
the  wages  go  hand  in  hand.  Good  wages  command  through 
competition,  effective  workers.  Good  workmen  create  efficient 
tools. 

On  the  other  hand,  it  is  a  truism  to  say  that  high-class  tools 
and  machinery  can  only  be  used  by  men  who  have  intelligence 
enough  to  secure  the  wages  their  efficiency  justifies.  Where  a 
man's  idea  of  moving  dirt  is  to  fill  a  basket  with  his  hands  and 
carry  the  basket  on  his  head,  his  wages  correspond  with  the 
fruitfulness  of  his  idea;  he  earns  10  cents  a  day.  Where  dirt 
is  moved  by  the  complex  organism  of  modern  civilized  industry 
which  applies  external  power  through  the  agency  of  railroads 
and  steam  shovels,  the  men  who  operate  the  tools  are  better 
paid.  The  master  of  the  industrial  enterprise,  which  may  be 
described  as  the  greatest  tool  of  all,  a  mechanism  fashioned  by 
the  combined  efforts  of  countless  brains  to  direct  the  united 
efforts  of  men  and  energy  to  useful  work,  is  pretty  sure  to  be  a 
millionaire;  the  man  who  runs  the  steam  shovel  gets  $5  a  day;  the 


372  THE  COST  OF  MINING 

laborer  who  moves  the  ties  in  front  of  the  steam  shovel  gets  $2 
a  day.  In  the  world's  market  the  product  is  worth  the  same 
thing  whether  it  is  the  result  of  an  industrial  miracle  or  of  infi- 
nite but  stupid  human  labor.  When  mankind  produces  efficiency 
it  gets  a  due  return  for  it,  a  return  which  is  expressed  pretty 
accurately  in  wages. 

A  RULE  WITHOUT  EXCEPTIONS 

The  only  reason  why  these  conclusions  are  not  accepted  as 
truisms  is  that  people  are  suspicious  of  each  other  and  are  accus- 
tomed to  doubt  the  fairness  of  the  distribution  of  wealth.  That 
this  distribution  is  a  matter  the  fairness  of  which  can  only  be 
guaranteed  by  ceaseless  vigilance,  it  is  a  folly  to  doubt;  but  on 
the  whole  I  believe  everybody  concerned  does  exert  vigilance,  a 
vigilance  made  instinctive  by  the  fundamental  laws  of  the  evolu- 
tion of  life,  and  on  the  whole  the  distribution  is  pretty  fair.  To 
avoid  possible  errors,  however,  we  had  best  perhaps  not  apply 
this  generalization  to  work  of  an  ephemeral  character,  but  only  to 
permanent  or  semi-permanent  industries  where  labor  has  time 
to  adjust  itself  to  competition. 

But  here  we  have  to  meet  the  question,  Are  not  modern 
methods  employed  in  South  Africa  and  India?  Have  we  not 
sent  there  our  best  engineers,  our  most  modern  machinery,  and 
our  best  methods?  If  so,  then  why  are  not  the  men  more  effi- 
cient and  the  wages  higher?  I  answer  that  it  is  indeed  true  that 
we  have  sent  many  civilized  appliances  to  those  places,  but  not 
all.  Among  the  things  we  have  not  sent  are  the  surroundings, 
point  of  view,  ambition,  and  energy  of  a  civilized  community. 
The  few  hundred  or  few  thousand  Europeans  who  operate  mines 
in  Africa  or  India  are  immersed  in  an  ocean  of  black  humanity, 
upon  which  the  small  foreign  community  has  an  influence,  true 
enough,  but  not  such  an  influence  as  to  revolutionize  the  habits, 
aims,  and  expectations  of  the  natives. 

An  enterprise  so  situated  must  take  into  account  at  the  begin- 
ning the  state  of  mind  of  its  future  employees,  and  it  would  be 
silly  to  make  such  plans  as  might  run  counter  to  their  prejudices; 
and,  even  if  the  managers  had  hopes  of  making  the  natives  even- 
tually as  effective  as  Europeans,  he  would  have  to  plan  his  opera- 
tions on  a  different  basis.  As  a  matter  of  fact,  such  an  expectation 
is  hopeless;  an  individual  Kafir  or  Hindoo  may  fill  a  certain 


QUARTZ-PYRITE  GOLD  MINES  373 

position  as  effectively  as  an  European,  but  to  expect  a  large  body 
of  such  people  to  become  collectively  as  effective  as  a  body  of 
Europeans  whose  ideas  had  been  trained  for  generations  along 
lines  making  for  an  entirely  different  standard  of  effort  is  quite 
absurd.  A  considerable  body  of  whites  may  indeed  supply  a 
certain  amount  of  mental  and  nervous  energy  to  the  natives 
which  the  latter  could  not  supply  for  themselves,  but  in  so  doing 
the  white  men  must  use  up  energy  in  the  direction  of  others 
that  they  might  otherwise  use  in  their  own  labors. 

If  a  body  of  colored  men  in  a  colored  man's  country  is  going 
to  turn  out  work  under  the  direction  of  white  men  as  cheaply  as 
the  white  men  can  do  it  themselves  in  their  own  country,  they  must 
do  it  by  working  for  lower  wages.  This  is  exactly  what  happens 
in  every  case.  It  is  a  rule  to  which  there  are  no  exceptions. 


CHAPTER    XX 

CRIPPLE    CREEK,    KALGOORLIE,    AND    GOLDFIELD 

Development  of  Cripple  Creek  and  Kalgoorlie  —  The  geology  of  Cripple 
Creek  —  Estimate  of  aggregate  results  —  Portland  Mine  —  Kalgoorlie  — 
The  costs  of  five  prominent  mines  —  Comparison  of  Cripple  Creek  and 
Kalgoorlie  —  Goldfield,  Nevada  —  Goldfield  Consolidated  Mines  Co.  — 
Estimate  of  costs. 

CRIPPLE  CREEK  AND  KALGOORLIE 

THESE  two  important  gold-mining  districts  were  discovered 
and  opened  on  opposite  sides  of  the  globe  at  about  the  same 
time,  shortly  after  1890.  Their  appearance  added  greatly  not 
only  to  the  output  of  the  yellow  metal  but  also  to  the  interest  in 
mining  enterprises.  It  was  confidently  believed  for  a  number 
of  years  that  they  represented  a  type  of  ore  deposits  that  had 
before  been  overlooked  on  account  of  their  refractory  nature  and 
their  elusive  non-spectacular  appearance;  in  other  words,  because 
they  were  hard  to  treat  and  hard  to  find,  and  that  many  other 
similar  ones  would  be  discovered.  This  expectation,  though 
natural,  has  not  been  borne  out  by  events;  for  no  important  new 
districts  of  the  same  type  have,  been  discovered  since,  and  the 
original  camps  after  a  history  of  less  than  twenty  years  find 
themselves  already  old  and  declining  in  real  and  comparative 
importance.  Nevertheless,  their  development  and  exploita- 
tion have  been  exceedingly  interesting  episodes  in  the  history  of 
gold  mining  and  the  men  who  took  part  have  added  much  to  the 
science  of  mining  and  metallurgy  not  only  in  gold  but  in  other 
metals. 

The  parallelism  between  the  two  districts  is,  I  believe,  more 
apparent  than  real.  About  the  only  point  in  common  is  the 
occurrence  of  tellurides  of  gold,  but  even  in  that  particular  the 
similarity  is  not  by  any  means  complete.  At  Kalgoorlie  only  a 
part  of  the  gold  is  associated  with  tellurium,  while  at  Cripple 
Creek  it  nearly  all  is.  The  result  is  that  in  the  two  camps  the 
metallurgical  problem  is  different;  at  least  it  has  been  worked 
out  differently. 

374 


CRIPPLE  CREEK,   KALGOORLIE,   AND   GOLDFIELD        375 

When  we  come  to  geological  and  structural  relations  there  is 
little  similarity.  At  Kalgoorlie  the  veins  are  in  a  volcanic  for- 
mation, apparently  of  great  geological  age,  that  has  been  sub- 
jected to  severe  and  deep-seated  dynamic  action,  resulting  in  the 
formation  of  strong  lodes  in  shear  zones. 

CRIPPLE  CREEK  MINES 

Cripple  Creek,  on  the  other  hand,  presents  deposits  in  an 
extinct  but  geologically  recent  volcano.  The  rocks  have  not 
been  subject  to  dynamic  or  metamorphic  action,  except  those 
incident  to  the  formation  of  the  veins.  The  productive  area  is 
elliptical  in  outline  with  a  length  of  about  five  miles  from  N.W. 
to  S.E.  and  a  width  of  three  miles  from  N.E.  to  S.W.,  and  con- 
tains numerous  veins  throughout,  but  the  most  valuable  ones 
seem  to  be  near  the  periphery  of  the  volcanic  mass,  many  being 
in  the  enclosing  granites  at  or  near  the  contact. 

The  veins  are  apparently  all  of  the  same  age  and  of  the  same 
character,  being  deposits  in  fissures  that  result  from  adjustments 
following  the  cooling  of  the  volcano.  There  was  very  little 
faulting  along  the  veins  either  preceding  or  following  the  mineral- 
ization. The  deposits  vary  in  character  according  to  the  inten- 
sity of  the  mineralization  along  the  fissures  and  according  to  the 
character  of  the  rocks  traversed  by  the  fissures.  In  some  cases 
a  vein  will  be  merely  the  quartz  filling  of  an  open  crevice  with 
very  little  impregnation  of  the  wall  rocks.  In  other  cases,  the 
deposit  of  quartz  in  the  fracture  planes  is  minute  in  quantity, 
but  extends  out  into  innumerable  joint  planes  along  which  there 
has  been  a  limited  impregnation  of  the  wall  rocks.  In  this  case 
the  workable  ores  have  the  form  of  a  stock-work.  In  still  other 
cases  the  walls  of  a  fissure  are  altered  considerably  for  several 
feet  on  each  side  of  the  crevice  by  the  introduction  of  new  quartz 
replacing  certain  minerals  in  the  original  rocks.  This  occurs 
more  commonly  in  the  granite,  but  sometimes  in  basalt  dikes, 
and  wherever  it  happens  the  ore  becomes  a  homogeneous  mass. 

Speaking  generally,  the  ore  deposits  are  either  too  small  or 
too  imperfectly  mineralized  to  allow  of  the  mining  of  merchant- 
able ore  in  mass.  A  large  amount  of  waste  must  be  broken,  of 
such  character  that  it  can  better  be  rejected  by  hand  sorting 
than  by  any  other  means.  While  it  is  not  possible  to  give  exact 
figures  on  this  point  it  is  a  fair  estimate  that  only  40  per  cent. 


376  THE  COST  OF  MINING 

of  the  material  stoped  is  shipped  to  the  mills.  The  amount  of 
development  work  required  is  very  great.  Up  to  1903  it  appears 
that  some  2,300,000  ft.  of  shafts,  drifts,  crosscuts,  raises,  and 
winzes  had  been  dug  for  a  total  output  of  some  3^  million  tons 
of  shipping  ore  and  some  9  million  tons  of  ore  stoped. 

Since  the  development  work  may  be  estimated  to  average 
some  $14  a  foot,  it  appears  that  it  must  have  cost  at  least  $8  a 
ton  for  all  ore  shipped  from  the  district  up  to  that  time,  for 
development  alone.  The  cost  of  stoping  the  same  ores  must 
have  averaged  not  less  than  $8  a  ton  more.  The  cost  of  freight 
and  treatment  in  mills  and  smelters  may  be  estimated  at  an 
additional  $9  or  $10,  so  that  the  total  cost,  exclusive  of  plant, 
was  $26  per  ton  shipped  and  certainly  more  than  $10  per  ton 
stoped.  If  we  add  the  plants,  the  total  estimate  for  all  ores 
will  not  fall  far  short  of  $30  per  ton  shipped,  and  $12  per  ton 
stoped.  The  ores  averaged  probably  $36  a  ton,  leaving  a  profit 
of  about  $6  a  ton  or  less  than  18  per  cent,  of  the  gross  value. 
These  figures  being  for  the  district  as  a  whole,  they  naturally 
include  a  good  many  failures.  Some  of  the  mines  have  secured 
lower  costs  throughout  their  history,  and  many  are  securing 
much  lower  costs  now.  The  dominant  factor,  however,  in  lower 
costs  is  the  lowering  grade  of  the  ore.  In  1899  the  ore  shipped 
averaged  $36.73  per  ton.  In  1906  the  average  had  fallen  to 
$20.35  per  ton. 

PORTLAND  MINE 

This  is  the  best  mine  in  the  district  and  it  presents  good 
examples  of  all  the  types  of  deposit  known  in  Cripple  Creek. 
Most  of  the  ore  has  come  from  an  area  of  some  60  acres  in  which 
there  have  been  done  up  to  the  end  of  1908  above  the  1500  ft. 
level  no  less  than  212,593  ft.  of  development  work.  This  devel- 
opment was  necessary  to  open  up  a  great  number  of  veins,  some 
of  which  were  independent  and  others  had  a  mineralized  connec- 
tion with  other  veins.  The  total  production  of  shipped  ore  was 
949,382  tons,  valued  at  $29,430,842,  giving  an  average  of  $31  per 
ton.  The  total  amount  stoped  may  be  estimated  at  2,400,000 
tons,  so  that  we  may  estimate  that  it  required  one  foot  of  develop- 
ment work  for  every  4^-  tons  shipped  and  for  every  11  tons  stoped. 

The  dividends  paid  amounted  to  $8,227,800  and  the  quick 
assets  to  approximately  $500,000  more,  making  total  earnings 


CRIPPLE  CREEK,   KALGOORLIE,   AND   GOLDFIELD        377 


$8,727,000,  equal  to  $9.30  per  ton  shipped.     A  rough  estimate  of 
average  costs  is  as  follows : 


Per  Ton,  Shipped 

Per  Ton,  Crude 

Development                                        

$3.00 

$1  20 

Plant            

1.50 

.60 

StopinfiT 

800 

3  20 

Freight,  treatment,  and  deductions  

9.20 

3.68 

Total    

$21.70 

8.68 

The  recent  history  of  the  mine  shows  much  lower  costs  largely 
due  to  a  diminution  of  the  grade  of  the  ore  and  of  the  amount  of 
development  work  done,  and  also  to  the  fact  that  the  company 
has  been  milling  its  own  ores.  In  1903  the  mine  was  shipping 
ores  at  averaging  $30  per  ton  and  doing  one  foot  of  development 
work  for  4^  tons  shipped.  In  1908  the  grade  of  the  ore  had  fallen 
to  $19.45  per  ton  shipped  and  the  development  work  was  only 
one  foot  to  16  tons  shipped. 

The  last  report  that  gives  operating  costs  in  detail  is  that  for 
1905,  from  which  I  get  the  following  data: 

The  costs  were  as  follows: 

Tons  shipped    109,232 

Average  yield  per  ton  after  deduct- 
ing mill  losses 21.96 

Development  work  accomplished..    21,073  feet  equal  to  one 

foot  to  5^  tons. 


Per  Ton,  Stoped 

Per  Ton,  Shipped 

Estimated  at  2k 
Times  Amount 

Shipped 

Sloping    

$7.85 

$3.14 

Construction  at  mine 

29 

12 

Development  

1.22 

49 

Transportation  to  mill    

1.37 

.55 

Milling  and  construction  

3.49 

1.40 

Amortization  of  mill    

1  00 

40 

General  expense   

08 

03 

Total  cost    

$1530 

$6  12 

Profit  per  ton  

6.66 

2.26 

378  THE  COST  OF  MINING 

Grouping  the  costs  per  ton  shipped  it  appears  that  the 
expenses  at  the  mine  were  $9.36  and  those  at  the  mill,  includ- 
ing transportation,  $5.94.  The  extraction  of  the  mill  was  95.82 
per  cent. 

When  we  consider  that  the  ore  thus  treated  is  obtained  by 
rejecting  at  the  mine  a  large,  part  of  the  ore  stoped,  and  that  the 
rejection  means  a  loss  of  some  low-grade  ore  which  must  be  com- 
puted to  average  some  $2.50  per  ton,  we  find  that  the  losses 
from  sorting,  assuming  that  60  per  cent,  is  rejected,  must  equal 
$1.50  per  ton  stoped.  On  this  basis  it  appears  that  the  grade  of 
ore  that  can  be  mined  under  the  conditions  exhibited  is  approxi- 
mately $8  per  ton  where  sorting  can  be  practised,  and  where  the 
ore  can  be  shipped  without  sorting  it  must  be  $10  per  ton. 

With  the  still  lower  grade  ores  which  have  been  mined  since 
1905  a  certain  lessening  of  cost  is  obtained  by  diminishing  the 
proportion  of  development  work  and  on  account  of  the  lower 
transportation  cost  for  lower  grade  ores.  The  freights  from  the 
mine  to  the  mill  are  based  on  a  sliding  scale  according  to  the 
grade  of  the  ore. 

MILLING 

The  mill  in  which  the  ores  are  now  treated  was  built  in  1901 
at  Colorado  Springs,  some  forty-five  miles  from  the  mine.  The 
cost  of  the  milling  plant  is  given  at  $910,000.  Owing  to  the 
steady  diminution  both  in  volume  and  in  grade  of  the  ore  it 
does  not  seem  unfair  to  expect  the  practical  exhaustion  of  the 
mine  within  a  few  years.  The  amount  of  ore  treated  in  the  past 
by  the  mill  is  approximately  600,000  tons  and  it  does  not  seem 
unreasonable  to  charge  the  ore  with  $1  per  ton  for  the  amortiza- 
tion of  capital  in  the  mill.  It  must  be  remembered  that  this 
capital  was  obtained  by  withholding  dividends  from  the  stock- 
holders, and  the  ore  now  being  treated  is  enjoying  the  value 
thus  created. 

The  mill  treatment  consists  of  dry  crushing,  followed  by 
careful  roasting  of  all  the  pulp;  chlorination  in  barrels  and  con- 
centration of  the  tailings.  The  concentrates  shipped  amount,  I 
believe,  to  about  1  per  cent,  of  the  ore. 

The  Portland  mine  while  representative  in  a  way  of  the  whole 
Cripple  Creek  district  is  decidedly  a  better  mine  than  most  of  the 
others.  Its  costs  are  undoubtedly  below  the  average,  although 


CRIPPLE  CREEK,   KALGOORLIE,   AND   GOLDFIELD        379 

there  may  be  some  like  the  Strong  and  the  Golden  Cycle,  which 
have  enjoyed  lower  mining  costs  on  account  of  having  a  more 


FIG.  20. — Illustration  of  the  development  work  in  the  Portland  mine  and 
vicinity,  where  1  foot  of  opening  work  has  been  necessary  for  mining  4^ 
tons  of  shipping  ore. 

homogeneous  ore.  Its  history  is  fairly  indicative  of  the  dis- 
trict in  which  variation  in  costs  is  probably  due  in  the  main  to 
development  work.  Many  properties  that  have  produced  just 


380 


THE  COST  OF  MINING 


as  good  ore  on  the  average  as  the  Portland  have  not  been  profit- 
able because  their  output  has  been  spasmodic  and  the  earnings 
from  an  occasional  bonanza  have  been  absorbed  in  prospecting. 

The  Portland  mine  has  been  well  and  energetically  managed 
from  its  very  beginning.  It  has  created  its  plant  out  of  earnings 
and  has  consistently  made  money  for  its  stockholders.  From 
time  to  time  there  has  been  criticism  of  its  management  and 
methods,  but  I  am  convinced  that  such  criticism  has  on  the 
whole  been  ill-considered,  being  based  largely  on  comparisons 
with  other  properties  that  have  issued  only  partial  statements 
of  costs  for  limited  periods. 

Cripple  Creek  is  a  good  example  of  a  mining  camp  where 
results  have  not  been  fully  understood.  For  instance,  it  is,  or 
was,  commonly  believed  that  labor  in  Cripple  Creek  was  exor- 
bitantly paid  and  ineffective.  In  my  opinion  the  truth  is  the 
exact  contrary  of  this.  The  miners  of  Cripple  Creek  have  always 
been  an  exceedingly  intelligent  and  effective  lot  of  men.  The 
wages  average,  it  is  true,  some  $3.40  for  the  eight-hour  shift, 
but  competition  for  the  places  has  allowed  operators  to  work 
with  selected  men.  While  the  climate  is  fairly  healthful  the 
altitude  of  10,000  ft.  above  the  sea  certainly  diminishes  one's 
endurance  as  compared  with  sea  level  conditions;  but  to  clinch 
the  argument  as  to  comparative  efficiency  of  the  highly  paid 
labor  of  Cripple  Creek  with  that  of  other  places  I  will  give  the 
following  figures  on  the  cost  of  development  work  in  the  Port- 
land mine  for  the  first  half  of  1903. 

896  FT.  DRIFTS  AVERAGING  5  FT.  BY  7  FT. 


Labor  Costs 

Per  Foot 

Tramming 

$898  38 

$1  00 

Pipe  and  trackmen    
Machine  men  . 

125.12 
1  686 

.14 
1  88 

Total  labor    

$2  709  50 

$302 

Other  Costs: 
Use  of  machines,  air,  etc  
Repairs,  cars,  etc 

$867.57 
6998 

$0.97 
08 

Explosives 

1  279  76 

1  43 

Hoisting  

414.53 

.46 

General  expense,  surveying,  assaying,  bosses  .  . 

515.20 

.58 

Grand  total 

$5  556  54 

$6.20 

CRIPPLE  CREEK,   KALGOORLIE,   AND   GOLDFIELD         381 


1229  FT.  CROSSCUTS  5  FT.  BY  7  FT. 


Tramming               t                        .... 

$1,13887 

$093 

Pip6  and.  trackmen 

149  37 

12 

Machine  men  

2,473.49 

202 

Total  labor 

$3  761  73 

$3  07 

Other  Costs: 
Use  of  machines,  air,  etc.  .    . 

$1  191  24 

$097 

Repairs  cars  etc 

111  28 

08 

Explosives  

2,044.65 

1.66 

Hoisting  
General  expense,  surveying,  assaying,  bosses  .  . 

656.67 
819.26 

.53 

.67 

Grand  total  

$8,684.83 

$7.07 

112  FT.  RAISES  AND  WINZES 


Tramming 

$105  76 

$    094 

Pipe  and  truckmen    
Timbermen           .        .        

3.37 
133.17 

.03 
1  19 

Machinemen 

354  50 

3  17 

Total  labor                            

596.80 

$533 

Other  Costs: 
Use  of  machines,  air,  etc  
Repairs  cars,  etc.      .    . 

$186.25 
684 

$1.66 
06 

Explosives 

158  52 

1  41 

Lumber  and  timber  

170.65 

1.51 

Hoisting  
General  bosses  assaying  etc. 

44.41 
5037 

.40 
45 

Grand  total  

$1  213  84 

$1084 

The  grand  total  cost  for  all  underground  labor  was  $7.068 
for  2237  ft.  of  development  work,  equal  to  $3.11  per  ft.  While 
it  is  not  possible  to  pretend  that  these  figures  are  an  average  for 
the  history  of  the  mine,  it  is  evident  that  they  exhibit  a  good 
record  of  labor  efficiency.  The  rocks  through  which  these  open- 
ings were  made  might  be  classed  as  eruptive  rocks  of  average 
hardness,  being  andesites  and  granites.  There  was  no  pumping 
charged  against  these  costs. 

This  is  another  evidence  of  the  lack  of  correspondence  in 
mining  costs  between  rate  of  wages  and  the  cost  of  labor.  If 
the  same  kind  of  work  is  done  cheaper  anywhere  I  have  not  been 
able  to  find  the  place. 


382  THE  COST  OF  MINING 

KALGOORLIE  MINES 

As  remarked  above,  the  resemblance  of  Kalgoorlie  to  Cripple 
Creek  is  more  apparent  than  real,  being  based  largely  on  the 
occurrence  of  telluride  ores  in  both  places. 

The  external  factors  at  Kalgoorlie  are  much  less  favorable 
on  account  of  a  dry  hot  climate  and  long  distances  from  populous 
centers.  The  internal  factors  are  more  favorable  than  those  of 
Cripple  Creek. 

The  lodes  in  Kalgoorlie  are  much  larger,  more  persistent, 
and  better  mineralized.  Instead  of  being  split  up  into  a  multi- 
tude of  small  veins  containing  short  and  inconstant  ore  shoots, 
Kalgoorlie  mines  have  only  a  few  lodes  which  present  ore  shoots 
of  an  average  stoping  width  of  11 J  ft.  The  lodes  have  been 
found  to  be  payable  to  a  depth  of  2600  ft.  Comparing  the  two 
districts  at  large,  it  is  probable  that  Kalgoorlie  has  one  capital 
advantage  in  having  a  much  smaller  proportion  of  development 
work  to  do.  Recollecting  that  all  Cripple  Creek  mines  seem  to 
require  one  foot  of  development  work  for  every  four  tons  stoped, 
making  a  cost  of  more  than  $3  per  ton  for  that  account  alone, 
it  seems  that  Kalgoorlie  enjoys  a  considerable  advantage  in  that 
particular.  I  have,  however,  no  means  of  obtaining  full  figures 
for  the  whole  district  of  Kalgoorlie,  upon  which  to  base  an  exact 
comparison,  but  am  compelled  to  draw  conclusions  from  the 
records  of  some  individual  mines  as  compared  with  the  Portland 
mine. 

In  stoping  the  Kalgoorlie  mines  have  a  marked  advantage  in 
being  able  to  avoid  sorting.  The  ore  is  sent  to  the  mills  prac- 
tically as  it  is  broken  in  stopes  of  considerable  width.  There  is 
no  evidence,  however,  that  the  cost  per  ton  of  rock  handled  is 
any  lower  in  Kalgoorlie  than* it  is  in  Cripple  Creek. 

When  we  come  to  milling  we  find  that  the  figures  are  some- 
what in  favor  of  the  Australian  district.  The  ores  are  milled  on 
the  spot,  thus  avoiding  railroad  transportation  charges.  The 
processes  themselves  are  slightly  cheaper  than  those  employed 
at  Cripple  Creek,  but  the  extraction  of  the  gold  is  somewhat 
less  perfect,  being  from  85  per  cent,  to  93  per  cent,  as  against 
about  96  per  cent,  in  the  Colorado  camp. 

Two  distinct  methods  are  employed  about  equally.  The 
first  method  is  wet  crushing  in  stamp  mills  followed  by  amalga- 


CRIPPLE  CREEK,   KALGOORLIE,   AND    GOLDFIELD       383 

mation,  by  concentration  and  cyaniding  of  sands  and  slimes, 
the  concentrates  alone  being  roasted  and  then  treated  by  a  special 
cyanide  process.  This  process  effects  a  saving  of  from  85  to 
93  per  cent,  of  gold  at  a  cost  of  from  $2.21  to  $3.92  per  ton,  vary- 
ing according  to  the  size  of  the  mills  and  the  grade  of  ore. 

The  alternative  process  consists  of  dry  crushing  in  ball  mills 
followed  by  roasting  the  entire  pulp  and  then  cyaniding.  This 
process  saves  from  90  per  cent,  to  92  per  cent,  of  the  gold  at  a 
cost  which  seems  to  average  somewhat  higher  than  the  other 
processes,  averaging  for  two  mines  $4.20  per  ton  in  1905.  The 
largest  mills  in  Kalgoorlie  have  a  capacity  of  more  than  20,000 
tons  a  month  as  against  10,000  tons  for  the  Portland  mill.  It  is 
possible  that  if  Cripple  Creek  ores  were  milled  on  the  same  scale, 
the  costs  would  be  lower  than  they  are.  When  we  come  to  con- 
sider the  difference  in  natural  advantages  between  the  two  points, 
it  is  evident  that  the  Kalgoorlie  ores  are  at  a  disadvantage. 
They  have  to  be  treated  under  the  most  unfavorable  conditions: 
water,  coal,  and  all  supplies  being  extremely  expensive,  while 
in  Colorado  the  mills  pay  little  or  nothing  for  water  and  are  situ- 
ated in  proximity  to  coal  mines. 

The  following  is  given  as  a  characteristic  analysis  of  ore: 

Silica    60  per  cent. 

Alumina 11  per  cent. 

Ferrous  oxide 5£  per  cent. 

Pyrites 7  per  cent. 

Calcium  carbonate 7£  per  cent. 

Magnesium  carbonate  6  per  cent. 

Soda  and  potash    1^  per  cent. 

Water    1  fV  per  cent. 

The  following  table  illustrates  the  diminishing  grade  of  ore 
with  increasing  depth  in  the  Great  Boulder  mine: 

300-400  $29.60 

400-500   39.90 

500-600   49.50 

600-700  18.80 

700-800  28.70 

800-900   27.20 

900-1000  27.30 

1000-1100 24.60 

1100-1200  .  19.70 


384  THE  COST  OF  MINING 

1200-1300  19.80 

1300-1400  13.40 

1400-1500  14.60 

1500-1900  12.70 

Calculated  average  $22.00  per  ton. 

If  we  assume  that  this  ore  is  worked  with  an  extract  of  90 
per  cent.,  the  actual  yield  would  be  somewhat  less  than  $20  per 
ton.  These  figures  are  quoted  from  an  article  by  Mr.  G.  W. 
Williams  on  "  Mining  Practice  in  Kalgoorlie,"  in  the  Engineer- 
ing and  Mining  Journal  of  January  25,  1908. 

Our  English  friends  have  been  disposed  to  believe  that  their 
practice  in  Kalgoorlie  has  been  superior  to  that  of  Colorado. 
It  is  possible  that  they  may  be  right  in  this  contention,  but  it 
must  be  remembered  that  they  do  not  secure  as  high  an  extrac- 
tion as  the  Colorado  mills,  and  in  making  comparisons  of  costs 
they  may  overlook  some  of  the  dominant  factors.  In  order  to 
convey  in  general  terms  a  comparison  of  the  operations  in  the 
two  camps  I  present  the  following  tables  showing  the  results  in 
1905  at  five  of  the  principal  properties  of  Kalgoorlie,  trying  in 
each  case  to  present  the  figures  as  nearly  as  possible  in  the  same 
manner  as  those  given  for  Cripple  Creek,  and  reducing  all  state- 
ments to  short  tons  and  American  currency. 


CRIPPLE  CREEK,   KALGOORLIE,   AND   GOLDFIELD        385 


KALGOORLIE  MINES — WHERE  ORES  ARE  CRUSHED  WET  IN  STAMP  MILLS  AND 
ONLY  CONCENTRATES  ROASTED.     RECORD  FOR  1905  —  SHORT  TONS 


Ivanhoe 


Oroya- 
Brownhill 


Golden 
Horse- 
shoe 


Tons   196,569 

Assay  value  per  ton  $15.50 

Loss  in  milling 2.36 

Yield     13.14 

Feet  development  for  year    6,808 

Cost  development  per  ton $0.82 

Current  construction    0.65 

Working  Costs: 

Breaking  ore    1.50 

Filling  stopes .24 

Tramming  and  hoisting .40 

Total  mining .  2.12 

Rock  breaking .09 

Ore  transport .03 

Milling    50 

Concentrating    .12 

Roasting    concentrates...    1  ton  concen-  .10 

Cyaniding  concentrates.  .  .        trates  to  18  .06 

Fine  grinding  concentrates       crude  .02 

Fine  grinding  sands    .16 

Cyanide  by  percolation .21 

Cyanide  by  agitation .60 

Filter  pressing .15 

Precipitation  and  smelting    .11 

Re-treating    .01 

Maintenance    

Total  treatment    2.21 

General  expense  London  and  Kalgoorlie  ...  .51 

Realization  of  bullion .14 

Deduct  profit  on  stores   .10 

Net  working  costs 4.94 

Taxes    0.30 

Freight    and    treatment    on    ore    shipped 

(Golden  Horseshoe  =  $22.79  per  ton) 

Total  estimate  of  cost    6.45 

Losses  in  milling 2.36 

Total  costs  and  losses 8.81 

Profit  per  ton    6.69 

Percentage  profit    43 


112,713 

$30.21 

2.11 

28.10 

12,285 

$1.43 

2.17 

0.83 

•  0.28 

0.58 

1.69 

.16 

.12 

.51 

.13 

16)  .12 
.07 
.09 
.31 

1.70 
.40 
.11 
.22 

3.92 

.64 

.25 

.14 

6.36 

0.80 


10.76 

2.11 

12.97 

17.24 

57 


249,800 

$14.87 

1.65 

13.22 

8.047 

$0.49 

1.08 


2.24 


1.32 


.10 


.98 

.13 

.06 

2.59 

.42 

.02 


0.31 

2.11 

9.26 

1.65 

10.91 

3.96 

27 


386 


THE   COST   OF   MINING 


KALGOORLIE  MINES  WHERE  ALL  ORES  ARE  ROASTED 


Great  Boulder  Proprietary 

Great 
Boulder 
Persever- 
ance 

Tons 

147,900 

165  465 

Assay  value  

$20.56 

$13  94 

Loss  in  milling    
Yield 

2.47 
1809 

1.30 
12  64 

Development  feet  incl.  diamond  drilling  .  .  . 
Costs  per  ton  treated  
Plant  expense  

7,373 
1.41 

14,163 
051 

Development  
Mining  —  Ore  breaking 

1.07  (average  3  yrs.) 
207 

1.60 
2  20 

Treatment  —  Sulphides    
Cyanide  plant  (tailings)   .  . 
Tailings  distribution  
Tailings  transport  
Realization  of  bullion    
Purchase  tailings    
Insurance 

2.13 
1.01 

.05 

3.81 
.95 
.12 
.35 
.16 
.04 
10 

General  expense  —  London    
Kalgoorlie  
Taxes  Australia 

.31 
.39 

49 

.24 
.29 
11 

Grand  total  cost  per  short  ton  
Mill  losses    

8.93 
2.47 

10.48 
1  30 

Profit  per  ton 

$11.40 
9  16 

$11.78 
2  16 

Percentage  profit  

44.5 

15.5 

Casting  up  an  average  of  the  ore  produced  by  these  mines  we 
find  that  the  assay  value  of  all  five  was  about  $17.60  per  ton.  It 
may  be  interesting  to  make  a  sort  of  comparison  between  these 
mines  and  the  Portland  of  Cripple  Creek  in  order  to  observe  the 
difference  in  results  obtained  on  an  ore  of  equivalent  value  in  the 
two  districts.  In  order  to  avoid  the  labor  of  averaging  costs 
let  us  take  the  results  of  the  Ivanhoe  mine,  which  produces  ores 
nearest  the  average  in  grade,  and  assume  that  the  Portland  mine 
were  producing  the  same  grade  of  ore,  using  the  costs  reported  by 
each  for  the  year  1905. 

Comparison  of  results  at  Ivanhoe  and  Portland  mines,  assum- 
ing that  each  produces  ore  averaging  by  assay  $15.50  per  ton,  but 
that  the  Portland  mine  rejects  by  sorting  60  per  cent,  of  ore 
stoped  and  that  the  waste  rejected  averages  $2.50  per  ton: 


CRIPPLE   CREEK,    KALGOORLIE,   AND   GOLDFIELD       387 


Ivanhoe 

Portland 

Tons  mined   per  foot  develop- 
ment   
Cost  development 

27 
$0.82 

Tons  mined  per  foot  develop- 
ment   
Cost  development 

13 
$049 

Cost    for    current    construction 
mine  and  mill  
Mining  
Sorting  losses 

0.65 
2.12 
0.00 

Current  construction  mine  only 

Mining  and  sorting  
Sorting  loss  60  per  cent  of  $2  50 

.12 

3.14 
1  50 

Transportation  to  mill 

03 

40  per  cent   of  $2  00 

80 

Milling  
Amortization  of  mill   (included 
under  construction) 

2.18 
000 

40  per  cent,  of  $3.50  
40  per  cent   of  $1  00 

1.40 
40 

General  expenses    

.85 

(included  in  costs  mainly)  

0.03 

Loss  in  milling    
Total  costs  and  losses 

2.36 
9  01 

4  per  cent,  of  $35.00  

1.40 

9  28 

Deduct  profit  on  stores  
Net  cost  

.10 
8.91 

0.00 
9.28 

Profit  per  ton  
Percentage  profit 

6.69 
43 

6.22 
40 

The  Ivanhoe  is  stated  by  Mr.  J.  H.  Curie  ("  Gold  Mines  of  the 
World")  to  be  the  best  managed  mine  in  Kalgoorlie.  Further- 
more, it  is  one  in  which  the  wet  crushing  method  is  used.  Unde- 
niably it  is  the  one  with  which  the  Portland  can  least  afford  to 
compare  itself.  Were  we  to  take  the  Great  Boulder  and  the 
Perseverance  for  comparison  we  should  find  the  figures  very 
much  in  favor  of  the  Colorado  property.  Those  properties  show 
milling  costs  of  $3.19  and  $5.39  respectively,  and  exhibit  the 
following  comparison  (using  the  same  figures  for  the  Portland  as 
before) . 


Great  Boulder 
Proprietary 

Great  Boulder 
Perseverance 

Portland 

Assay  value  of  ore    
Total  operating  costs  
Loss  in  milling  and  sorting  

$20.56 
8.93 
2.47 

$13.94 
10.48 
1.30 

$15.50 
6.38 
2.90 

Total  costs  and  losses  

11.40 

$11.78 

$9.28 

It  is  plain  that  there  is  no  ground  for  making  a  comparison 


388  THE  COST  OF  MINING 

favorable  to  one  district  and  unfavorable  to  the  other;  and  that 
if  the  managements  in  the  two  districts  were  to  be  exchanged 
the  stockholders  would  not  have  much  cause  to  worry. 

Since  1905  the  mines  have  undoubtedly  succeeded  in  lowering 
their  costs  somewhat,  as  in  the  case  of  Cripple  Creek,  in  pro- 
portion to  the  diminishing  grade  of  the  ore.  The  Golden  Horse- 
shoe mine  in  the  years  1907  and  1908  treated  554,131  tons  with 
an  average  yield  of  $10.95.  The  dividends  paid  were  $2,405,600, 
equal  to  $4.34.  Assuming  that  the  dividends  equaled  the  ac- 
tual profit,  the  cost  figures  out  at  $6.61  per  ton.  This  compares 
with  the  total  of  $7.15  for  the  same  mine  in  1905.  It  is  to  be 
remarked  that  in  the  tables  given  above  the  Golden  Horseshoe 
ships  7  per  cent,  of  its  ore  to  smelters  in  the  form  of  concentrates 
and  high-grade  ore.  This  imposed  a  further  cost  of  $2.11.  This 
mine  is  still  securing  a  profit  of  40  per  cent,  of  the  gross  value  of 
gold  produced.  Its  complete  record  for  eleven  years'  operation 
shows  an  output  of  $33,154,000  in  gold,  from  which  $13,468,000 
have  been  paid  in  dividends,  equal  to  41  per  cent,  of  the  gross 
yield.  The  total  number  of  tons  treated  is  not  given,  but  it  will 
approximate  two  million,  so  that  the  yield  for  the  life  of  the  mine 
has  been  about  $16.70  per  ton  and  profits  $6.70,  leaving  $10 
as  the  cost  of  operating,  including  all  plant  and  development. 
The  records  of  the  mine,  however,  do  not  indicate  the  expenses 
and  deductions  incurred  for  shipping  ore  to  the  smelters,  simply 
reporting  the  sums  received  net  from  such  shipments.  If  these 
expenses  were  included  it  is  probable  that  they  would  make  an 
addition  of  something  more  than  $2  per  ton  both  to  the  costs 
and  to  the  yield  of  gold,  making  the  total  costs  something  more 
than  $12,  and  the  yield  of  gold  approximately  $19  per  ton.  If 
the  extraction  averaged  90  per  cent.,  the  gross  assay  valuation 
of  the  ores  mined  would  be  about  $21,  which  approximates  very 
closely  to  that  of  the  Great  Boulder. 

No  mines  in  Cripple  Creek  have  produced  anything  like  such 
quantities  of  ore  of  this  grade,  nor  have  they  earned  such  large 
dividends.  The  fact  is  that  the  Kalgoorlie  camp  contains  only 
nine  or  ten  mines  of  first-class  importance,  but  these  have  pro- 
duced nearly  all  the  gold  and  all  of  the  dividends  of  the  district. 
In  them  the  values  have  been  concentrated  into  a  much  smaller 
space  than  in  the  case  of  Cripple  Creek,  where  the  output  has  come 
from  a  large  number  of  comparatively  small  producers,  and  where 


CRIPPLE  CREEK,   KALGOORLIE,    AND   GOLDFIELD       389 

payable  values  have  practically  ceased  at  a  depth  of  1200  ft. 
This  group  of  dividend-paying  properties  are  therefore  better 
and  higher  grade  mines  than  any  in  Cripple  Creek.  Their  out- 
look for  the  future  is  also  far  more  attractive.  The  Ivanhoe 
reports  reserves  of  934,000  tons,  averaging  $11.75  per  ton,  and 
good  ore  at  the  1970  ft.  level;  the  Golden  Horseshoe  1,065,000 
tons  averaging  $12,  with  $15  ore  on  the  2000  ft.  level;  the  Great 
Boulder  731,000  tons,  averaging  $16,  and  good  ore  on  the  2600 
ft.  level;  the  Associated  483,517  tons,  averaging  $10  per  ton;  in 
each  case  assuring  the  product  for  3  to  4  years,  and  an  average 
profit  of  40  per  cent,  of  the  gross  value.  It  would  not  be  surpris- 
ing if  they  proved  payable  to  much  greater  depths. 

GOLDFIELD,  NEVADA 

This  district  was  discovered  in  1903  about  twenty  miles  south 
of  the  somewhat  older  camp  of  Tonapah,  the  success  of  which 
had  served  to  attract  many  prospectors  to  the  comparatively 
old  mining  regions  of  Nevada.  The  discovery  in  that  year  of 
some  rich  ore  on  the  Jumbo  and  Combination  mines  started  a 
considerable  excitement  during  1904  followed  by  comparative 
quiescence  during  the  latter  part  of  1905;  but  the  discovery  of 
an  extraordinary  bonanza  on  the  Mohawk  claim  in  April,  1906, 
encouraged  the  recrudescence  of  the  mining  boom  not  only  in 
Goldfield  but  in  other  parts  of  Nevada,  until  the  excitement 
reached  by  the  end  of  1906  a  degree  of  extravagance  for  which 
it  would  be  hard  to  find  a  parallel.  About  that  time  the  owners 
of  the  Mohawk,  pursuing  their  good  fortune  with  commendable 
intelligence  and  energy,  secured  most  of  the  promising  ground 
in  the  camp  and  formed  the  Goldfield  Consolidated  Mines  Com- 
pany, which  has  to-day,  after  a  period  of  reorganization  and 
development,  the  most  productive  and  profitable  gold  mine  in 
the  world. 

The  Goldfield  district  is  in  a  region  of  volcanic  rocks  'of  doubt- 
ful but  probably  rather  recent  geological  age.  A  series  of  great 
quartz  veins,  or  rather  zones  of  silification  is  found,  indicated  by 
a  series  of  bold  outcrops  which  have  a  strike  usually  nearly  north 
and  south.  It  seems  probable  that  the  gold  belongs  to  a  later 
mineralization,  because  the  quartz  masses  are  nearly  or  quite 
barren.  The  rich  ore  shoots  seem  confined  to  smaller  fissures 
that  traverse  the  great  quartz  masses  in  various  directions  and 


390  THE  COST  OF  MINING 

have  produced  a  considerable  amount  of  brecciation  in  them. 
These  later  fissures  often  cut  the  great  quartz  reefs  at  right  angles 
and  the  ore  shoots  seem  rather  more  apt  to  occur  along  the  flanks 
than  in  the  interior  of  the  reefs.  There  have  been  discovered  a 
number  of  rich  bonanzas,  probably  due  in  considerable  measure  to 
a  process  of  reconcentration  near  the  surface,  but  exploration 
has  not  proceeded  deep  enough  to  establish  this  as  more  than  a 
probability. 

The  grade  of  the  ore  is  already  diminishing  rapidly  owing  to 
causes  that  are  universal  in  such  districts.  Owing  to  lack  of 
treatment  facilities  on  the  ground,  and  to  the  high  cost  of  trans- 
portation, at  the  beginning,  only  high-grade  ores  could  be  shipped. 
In  1906  the  Mohawk  bonanza  produced  in  eight  months  upwards 
of  70,000  tons  of  ore  averaging  $120  per  ton.  With  the  institu- 
tion of  milling  plants  on  a  large  scale,  lower  grade  ores  can  be 
treated  so  that  at  present  the  Goldfield  Consolidated  is  mining 
20,000  tons  a  month  of  ore  averaging  $40  a  ton.  That  such  values 
will  be  maintained  is  an  unreasonable  expectation  that  has  never 
been  indulged  in  by  the  management.  I  am  led  to  believe  that 
the  actual  developments  indicate  about  one-half  a  million  tons  of 
ore  that  will  average  between  $20  and  $25. 

During  the  past  two  years  the  efforts  of  the  management  have 
been  directed  towards  the  completion  of  a  satisfactory  organiza- 
tion, the  prosecution  of  development  and  the  construction  of  a 
new  mill.  This  was  done  so  successfully  that  at  the  beginning 
of  1909  the  property  was  ready  to  begin  extensive  operations 
on  a  new  basis.  A  magnificent  modern  mill  was  built  with  a 
capacity  of  600  tons  a  day  with  a  railroad  to  provide  for  trans- 
portations of  ores  to  it,  together  with  some  additions  to  the 
mining  plant  at  a  total  expense  of  $900,000. 

During  1908  17,460  ft.  of  development  work  was  done  by  the 
company  at  an  average  cost  of  $17.60  a  foot  and  20,463  ft.  were 
done  by  leasers.  The  amount  of  ore  developed  by  this  work  is 
not  stated,  but  the  lessees  shipped  only  25,600  tons  and  probably 
did  not  put  much  ore  in  sight,  so  that  this  portion  of  the  develop- 
ment work  only  seems  to  have  opened  up  to  1J  tons  per  foot. 
What  the  cost  for  development  will  average  is  a  question  that 
probably  will  only  be  determined  after  several  years'  experience, 
but  judging  from  the  large  amounts  done  to  date,  it  is  hardly  likely 
that  the  cost  per  ton  will  be  less  than  $2  from  this  item. 


CRIPPLE  CREEK,   KALGOORLIE,   AND  GOLDFIELD       391 

The  cost  of  sloping  will  undoubtedly  vary  according  to  the 
extent  to  which  ore  must  be  sought  in  narrow  seams,  but  experi- 
ence to  date  seems  to  indicate  that  ore  of  the  milling  grade  will 
be  found  in  fairly  wide  stopes,  so  that  the  cost  of  stoping  will 
probably  be  about  $2.  In  addition  to  this  the  report  for  1908 
seems  to  indicate  that  general  expenses  will  approximate  30  cents 
per  ton  on  an  output  of  240,000  tons  a  year.  It  would  seem, 
therefore,  that  the  cost  of  mining  might  be  calculated  at  about 
$4.30. 

MILLING 

Mr.  J.  H.-  MacKenzie,  manager,  describes  the  milling  process 
briefly  as  follows: 

"  Crushing  in  gyratory  rock  breakers  and  stamps,  with  regrind- 
ing  to  slime  and  tube  mills;  amalgamation  over  copper  plates 
both  before  and  after  milling;  concentration  by  means  of  Deister 
slime  tables;  cyanidation  of  tailings  from  concentrators  with  the 
aid  of  Pachuca  adjutators  and  Butters  niters  and  zinc  dust  pre- 
cipitation. Concentrates  are  treated  in  an  auxiliary  plant  by 
means  of  a  modification  of  the  cyaniding  process,  and  products 
from  all  departments  of  the  mill  are  refined  and  shipped  directly 
to  the  mint  as  gold  bullion." 

This  process  is  very  similar  to  that  employed  at  Kalgoorlie 
and  it  is  very  probable  that  the  costs  will  be  approximately  the 
same.  Experience  in  actual  operation  has  not  gone  far  enough 
to  demonstrate  exactly  what  it  will  be,  but  it  is  worth  remark- 
ing that  the  mill  is  an  extremely  good  one  and  works  with  the 
greatest  precision,  giving  an  extraction  of  about  94  per  cent, 
gold.  If  we  assume  that  the  costs  will  be  the  same  as  at  the 
Ivanhoe  in  Kalgoorlie,  which  is  a  modern  mill  of  the  same  size, 
namely,  100  stamps,  we  may  calculate  the  cost  of  treatment  at 
$2.20  a  ton  including  transportation  from  the  mines. 

It  is  to  be  remembered  that  the  cost  of  the  plant  is  approx- 
imately $900,000.  Owing  to  the  erratic  character  of  the  ore  it 
would  seem  wise  to  amortize  the  plants  in  five  years,  which  would 
make  a  calculation  for  amortization  of  75  cents  a  ton.  We  may 
also  calculate  that  current  construction  will  amount  to  about 
25  cents  a  ton,  making  a  total  plant  cost  of  $1  per  ton  treated. 
On  this  basis  we  might  calculate  the  costs  as  follows: 


392  THE  COST  OF  MINING 

Mining $4.30 

Milling  2.20 

Construction  .  25 


Total  current  costs    $6.75 

Add  for  amortization    75 


Total  cost  per  ton    $7.50 

With  an  extraction  of  94  per  cent,  these  costs  indicate  that 
the  minimum  assay  value  of  a  payable  ore  should  be  $8  a  ton. 

While  the  above  figures  are  given  only  as  approximations  it 
is  nevertheless  true  that  they  are  made  with  some  reference  to 
the  figures  unofficially  given  out  by  the  company  for  the  present 
year  and  they  may  be  accepted  with  some  confidence. 

For  the  present  year  the  yield  of  gold  from  this  property 
promises  to  be  enormous,  perhaps  $8,000,000  gross,  on  which 
net  profits  upwards  of  $5,000,000  may  be  realized.  Such  an 
output  will  be  a  new  record  among  the  gold  mines  of  the  world. 


CHAPTER  XXI 
SILVER  MINING  AT   COBALT   AND   GUANAJUATO 

Phenomenon  of  the  sudden  decline  of  the  price  of  silver  compared  with  gold 
—  Present  inferior  position  of  silver  mining  —  Cobalt  as  an  example  of 
high  mining  costs  —  Logic  of  costs  —  Guanajuato. 

SILVER  MINING 

BY  far  the  greater  portion  of  the  silver  of  the  world  is  now 
obtained  as  a  by-product  from  mines  that  are  operated  chiefly 
for  lead,  copper,  or  gold;  and  in  this  connection  the  metal  has 
been  frequently  touched  upon  in  preceding  chapters.  There 
are  only  a  few  conspicuous  districts  now  where  silver  is  the  pri- 
mary object  of  the  mining  industry.  Some  remarks  on  two  of 
these,  Cobalt,  Ontario,  and  Guanajuato,  Mexico,  are  sufficiently 
interesting  to  warrant  insertion. 

The  present  obscure  position  of  silver  mining  is  due  to  one  of 
the  most  remarkable  economic  revolutions  in  history.  In  the 
course  of  twenty-five  years  in  the  latter  part  of  the  nineteenth 
century  silver  declined  in  value  from  $1.30  to  about  55  cents  per 
ounce,  and  in  so  doing  suddenly  lost,  apparently  forever,  a  posi- 
tion of  importance  as  the  companion  of  gold  that  it  had  held  in 
the  estimation  of  mankind  for  thousands  of  years.  It  is  no  won- 
der that  such  a  violent  and  unprecedented  fall  astounded  the 
generation  that  beheld  it,  and  put  in  play  that  instinct  which 
attributes  any  mysterious  unpleasant  happening  to  design,  and 
which,  in  this  instance,  took  the  form  among  the  half-informed 
of  an  accusation  against  financiers  of  a  gigantic  "conspiracy." 
It  is  infinitely  more  probable  that  the  financiers  of  the  world 
understood  the  reasons  for  the  fall  of  silver  as  little  as  other 
people.  It  is  no  part  of  the  present  work  to  offer  an  explanation  ; 
merely  to  point  it  out  as  the  most  conspicuous  example  of  a  great 
commodity  suddenly  taking  a  price  level  radically  different  from 
its  traditional  one. 

393 


394 


THE   COST  OF  MINING 


The  comparatively  unimportant  position  now  held  by  silver 
mines  would  be  very  different  had  not  the  fall  in  prices  taken 
place,  for  with  silver  at  $1.29  an  ounce,  many  of  the  important 
mining  districts  would  be  more  valuable  for  their  silver  than  for 


FIG.  21.  —  The  drop  in  value  of  silver. 

anything  else.  The  Coeur  d'Alenes,  Park  City,  Tintic,  and  many 
other  districts  would  be  so  changed  in  the  relative  importance  of 
the  metals  they  produce  that  they  could  safely  be  called  silver- 
mining  camps  producing  lead,  gold,  and  copper  as  by-products. 

COBALT  DISTRICT,  ONTARIO 

Colbalt  is  unique  not  only  on  account  of  the  geological  occur- 
rence of  its  ores,  but  also  because  it  is  an  example  of  the  absolute 
inconsequence  of  high  costs  per  ton  in  precious  metal  mining. 
So  far  as  I  know  the  Cobalt  ores  are  mined  at  the  highest  cost  of 
any  ores  of  importance  in  the  world,  yet  their  silver  contents  are 
secured  at  the  lowest  cost,  with  the  largest  margin  of  profit. 
The  district  belongs  to  the  same  series  of  pre-Cambrian  rock 
formations  that  has  proved  so  prolific  in  iron,  copper,  and  nickel 
near  the  shores  of  Lake  Superior;  but  at  Cobalt  the  orebodies 
instead  of  having  the  grandiose  character  so  universal  in  Lake 
Superior,  are  exceedingly  small,  disconnected,  and  rich.  The 
geological  resemblance  to  Lake  Superior  extends  to  the  character 


SILVER  MINING   AT  COBALT  AND   GUANAJUATO 


395 


of  the  surface,  which  is  highly  glaciated  and  covered  with  swamps 
and  lakes  with  low  rounded  knobs  of  more  resistant  rocks  form- 
ing occasional  eminences  above  the  generally  level  country.  The 
rocks  consist  of  the  ancient  greenstone  schists,  usually  called  the 
Keewatin,  with  some  troughs  of  Huronian  quart zites  and  conglom- 
erates, the  latter  invaded  by  dykes,  and  sills  of  biabase.  The 
veins  occur  in  all  of  the  rocks  to  some  extent,  but  chiefly  in  the 
sedimentary  formations. 


FIG.  22. 

The  superficial  extent  of  the  district  is  several  thousand  acres, 
but  the  individual  orebodies  are  so  small  that  they  might  almost 
be  described  as  minute.  They  are  usually  only  from  one  inch  to 
six  inches  wide  and  from  a  few  feet  to  150  ft.  long,  and  ordinarily 
of  no  great  depth.  This  at  least  applies  to  the  ore  shoots.  Some 


396  THE  COST  OF  MINING 

veins  that  are  barren  on  the  surface  contain  ores  at  greater 
depth.  While  the  absolute  bottom  of  the  district  has  not  been 
reached,  the  hopes  of  the  operators  are  more  fixed  on  discovering 
new  veins  than  on  following  old  ones  in  depth.  The  vein  filling 
is  largely  calcite  with  some  quartz.  The  ore  consists  largely 
of  native  silver,  but  associated  with  it  are  some  of  the  richer 
sulphides,  dyscrasite,  argentite,  pyrargyrite.  With  the  silver 
occurs  cobalt,  nickel,  and  arsenic  in  smaltite,  niccolite,  and  other 
minerals. 

The  problem  of  mining  such  ores  consists  largely  in  finding 
them.  Once  found  the  principal  problem  is  to  extract  them 
cleanly  —  no  concentrating  process  being  so  efficient  for  the  pur- 
pose as  hand  sorting.  The  ores  once  secured  are  shipped  to  the 
smelters  at  a  cost  for  freight,  treatment,  and  deductions  of  over 
$50  a  ton. 

But  the  ores  thus  mined  contain  750  oz.  of  silver  per  ton,  so 
that  $50  for  all  treatment  charges  only  means  7  cents  an  ounce. 
The  cost  of  mining  in  the  whole  district,  outside  of  treatment 
charges,  seems  to  have  averaged  about  $145  a  ton,  probably 
divided  about  equally  between  development  and  extraction. 
Even  this  high  figure  only  means  20  cents  an  ounce. 

It  is  almost  amusing  to  speculate  on  the  surprise  that  a  Lake 
Superior  miner  must  feel  at  such  tremendous  costs  per  ton; 
nevertheless,  there  is  not  the  slightest  ground  for  supposing  that 
these  high  costs  do  not  represent  just  as  good  mining  practice 
as  any  in  Lake  Superior.  It  is  for  the  purpose  of  illustrating 
this  fact  that  the  mines  at  Cobalt  are  interesting  in  a  work  on 
the  cost  of  mining. 

Let  us  neglect  the  question  of  finding  ores  and  assume  that 
it  costs  $75  a  ton  to  get  them  out  of  the  ground.  What  does  this 
mean  in  comparison  with  the  cost  of  say  $1  a  ton  for  mining  the 
ore  at  the  Wolverine?  Simply  that  it  takes  seventy-five  times  as 
much  work  to  get  it  out.  That  this  should  be  so  is  a  direct  result 
of  the  size  and  thickness  of  the  orebodies.  In  the  case  of  the 
Wolverine  the  thickness  is  15  ft.  or  180  in.  and  the  ore  is  placed 
on  surface  for  $1  per  ton.  It  is  probable  that  if  the  orebody  were 
only  4  ft.  thick  and  as  continuous  as  it  actually  is,  the  mining 
cost  at  the  W7olverine  would  be  about  $2  a  ton.  Now  since 
an  opening  4  ft.  wide  is  about  the  least  that  can  be  made,  a  cost 
greater  than  $2  a  ton  will  be  simply  an  inverse  ratio  of  the  actual 


SILVER  MINING   AT  COBALT  AND   GUANAJUATO         397 

thickness  to  4  ft.  If  the  cobalt  ore  is  to  cost  $75  per  ton  we 
might  calculate  the  thickness  of  it  at  48  in.  -=-  y  =  1.28  in. 

A  continuous  seam,  then,  of  ore  1.28  in.  thick  ought  to  cost 
$75  a  ton  for  mining.  It  means  exactly  the  same  thing  if  a  series 
of  bunches,  averaged  up,  amount  to  a  mean  of  1.28  in. 

In  the  light  of  the  figures  there  is  no  mystery  in  the  fact  that 
an  orebody  1.28  in.  thick  may  be  a  bonanza.  It  is  worth  $400 
a  ton.  If  this  value  were  scattered  through  4  ft.  of  a  continuous 
orebody,  it  would  give  a  value  to  the  whole  mass  of  $11  a  ton, 
equal  at  average  prices  to  75  Ib.  of  copper,  which  every  one  would 
recognize  as  a  bonanza.  Such  an  orebody  would  give,  under 
the  costs  prevailing  among  Lake  Superior  amygdaloid  mines, 
figures  something  as  follows: 

Mining  per  ton $2.00 

Surface  expense,  transportation,  and  milling 90 

Construction  and  amortization    50 

Smelting,  refining,  and  marketing    80 

Total    $4.20 

Cost  per  pound  copper  about  5.6  cents. 

At  fifteen-cent  copper  the  profit  would  be  63  per  cent,  of  the  gross 
value. 

If  we  scatter  the  values  through  a  mass  15  ft.  thick,  there 
would  be  the  equivalent  of  20  Ib.  copper  per  ton,  and  the  costs 
would  be: 

Mining $1.00 

Surface,  expense,  transportation,  and  milling 65 

Construction  and  amortization    30 

Smelting,  refining,  and  marketing    22 

Total    $2J7 

Cost  per  pound  copper,  11  cents. 
Profit  on  gross  value,  27  per  cent. 

In  the  case  of  the  4-ft.  orebody  the  costs  per  ton  would  be 
approximately  twice  as  high  as  in  the  case  of  the  15-ft.  orebody 
containing  the  same  copper,  but  the  cost  of  copper  would  be 
only  half  as  great  and  the  profit  more  than  twice  as  much. 

This  makes  it  plain  enough  that  the  concentration  of  values 
is  a  great  economic  advantage, 


398 


THE   COST   OF   MINING 


In  the  case  of  the  Cobalt  orebody  1.28  in.  thick  (always  neglect- 
ing the  question  of  prospecting),  on  the  theory  of  a  continuous 
seam,  the  results  are  as  follows : 

Mining  per  ton $75.00 

Smelting  and  marketing 50.00 

Total  cost  per  ton $125.00 

Value  per  ton,  $400;  profit,  69  per  cent. 

But  in  Cobalt  there  is  no  continuity.  The  ore  must  be  looked 
for  at  an  additional  cost  of  $70  a  ton  so  that  the  actual  profit 
is  reduced  to  52  per  cent.  Nevertheless  it  is  quite  simple  to 
show  that  a  natural  concentration  in  values  involving  enormous 
increases  of  cost  per  ton  is  a  distinct  economic  advantage. 


RECORD  OF  COBALT  AS  A  WHOLE 

Tons  Ounces  Silver  Value 

1904-1908 48,545  35,083,300          $19,495,000 

9,495,000 
Cost  per  ton  =  -^JQ-^-  =  $195 

4o,o4o 

Value  per  ounce,  55.7  cents 
Cost  per  ounce,     27     cents 


Dividends 

$10,000,000  ± 


1904-1908 8,449 


NIPISSING  MINE 
8,145,834  $4,540,000 


n    4  $1,300,000      1C. 

Cost  per  ton  -      '  =  154  ± 


$2,640,000 
600,000 


Cost  per  ounce,  16  cents  ± 

NIPISSING  MINE,  1908 
Tons  shipped,  3505;  ounces  silver,  2,893,931;  ounces  per  ton,  826 


Costs 

Dollars 

Per  Ton 

Per  Ounce,  Silver 

Operation     

$361,274.85 

$105.46 

$0.13011 

Depreciation 

44  631  66 

1303 

01607 

Marketing  ore  

174,775.66 

51.02 

.06294 

Legal,  etc  

22  292.51 

6  50 

00803 

Less  income  

$27,761.61 

$8.10 

$  01000 

Total 

$575  213  07 

$167  91 

$0  20715 

SILVER  MINING   AT  COBALT  AND   GUANAJUATO         399 

There  is  good  reason  to  believe  that  the  above  figures  for  1908 
are  ample.  They  include  a  depreciation  charge  on  plant  and 
buildings  of  24  per  cent.  It  appears  that  the  cost  of  "  prospect- 
ing" "  exploration/'  and  "  development  "  (whatever  they  may 
separately  mean)  amounts  to  some  37  per  cent,  of  the  total  cost 
of  "  operation. " 

KERR  LAKE  MINING  COMPANY 

For  the  year  ending  August  31,  1908,  this  company  showed 
the  following  record: 

Tons  mined,  528;  ounces  silver,  1,473,712;  ounces  per  ton,  2790. 

Costs  Per  Ton  Per  Ounce 

Production  and  development $139,530  $264.25  $0.0947 

Shipping  and  smelting    76,093  144.30  .0516 

General  expense     32,904  62.30  .0223 

Plant  and  machinery 57,419  108.75  .0390 

Total    305,946  57U44  $0.2076 

This  is  probably  a  new  record  for  high  costs  per  ton,  yet  silver 
was  produced  for  less  than  21  cents  per  ounce  and  the  profit  was 
nearly  70  per  cent,  of  the  gross  value. 

Not  all  of  the  Cobalt  ores  are  of  such  high  grade,  several  of 
the  mines  being  now  equipped  with  mills  for  concentrating,  but 
the  mills  only  handle  a  small  tonnage  and  it  is  safe  to  say  that 
if  Cobalt  had  to  depend  on  the  low-grade  ores  that  it  would  never 
have  been  heard  of. 

GUANAJUATO,  MEXICO 

Guanajuato  has  the  reputation  of  having  been  the  most 
productive  silver-mining  district  in  the  world;  its  total  output 
exceeding  one  thousand  million  ounces.  It  is  the  very  reverse 
of  the  Cobalt  district  in  geological  structure,  ore  deposits,  and 
methods.  The  rocks,  instead  of  belonging  to  the  ancient  Algon- 
kian  series,  belong  to  the  comparatively  recent  Cretaceous. 
Instead  of  the  multitude  of  small  veins  there  are  four  or  five  very 
large  fault  fissures  carrying  a  strong  mineralization  of  quartz 
and  silver  sulphides.  The  mining  methods,  instead  of  depending 
on  the  careful  sorting  of  small  streaks  of  rich  smelting  ore,  are 
designed  to  extract  large  quantities,  and  finally,  the  treatment, 
instead  of  being  smelting  as  at  Cobalt,  is  confined  almost  entirely 
to  cyaniding.  In  the  early  days  (and  by  early  days  I  mean  the 


400  THE  COST  OF  MINING 

period  of  more  than  two  hundred  and  fifty  years  following 
1550,  during  which  an  occasional  bonanza  was  discovered)  it  is 
probable  that  Guanajuato  bore  a  much  closer  resemblance  to 
Cobalt  than  it  does  to-day.  It  is  likely  that  a  very  large  amount 
of  high-grade  ore  was  then  mined  and  that  the  lower  grade  ores 
of  the  present  day  have  become  valuable  more  because  the  rich 
ores  of  former  times  are  no  longer  to  be  had  than  for  any  other 
reason.  In  other  words  it  is  probable  that  if  the  high-grade 
ores  of  former  times  were  now  available  the  ores  being  mined 
at  present  would  not  excite  much  attention.  It  has  often  been 
remarked  that  Guanajuato  bears  a  close  resemblance  to  the 
Comstock  lode  in  Nevada,  and  its  history  has  been  similar;  but 
its  life  has  been  longer  and  its  output  greater.  The  longer  life 
of  the  Mexican  camp  has  been  chiefly  due  to  the  fact  that  until 
recently  it  has  not  been  worked  with  American  appliances  and 
energy,  the  result  being  that  at  Guanajuato,  after  a  life  of 
three  hundred  and  fifty  years,  the  deepest  mines  have  reached 
a  depth  of  only  2000  ft.,  while  on  the  Comstock  lode  explora- 
tions reached  a  depth  of  over  3000  ft.  within  thirty  years  after 
the  first  discovery. 

The  present  mining  activity  of  Guanajuato  is  chiefly  in  the 
hands  of  Americans  and  is  extremely  recent,  dating  back  only  to 
1904  when  it  was  first  satisfactorily  demonstrated  that  the  ores 
could  be  economically  worked  by  the  cyanide  process.  Since 
that  time  the  output  of  the  camp  has  increased  very  rapidly. 
It  has  now  reached  an  annual  output  of  about  ten  million  ounces, 
divided  among  some  eight  or  ten  producing  mines.  The  average 
ore  is  probably  worth  some  $7  or  $8  per  ton,  the  values  consist- 
ing of  about  13  oz.  of  silver  and  .05  oz.  of  an  ounce  of  gold. 

The  economics  of  the  districts  are  somewhat  as  follows:  Labor 
is  very  cheap  and  just  as  poor  as  it  is  cheap;  miners  earning 
from  $1  a  day  down.  There  is  no  evidence  here  any  more  than  in 
India  or  South  Africa  that  low  wages  means  cheap  operating. 
Water-generated  electric  power  has  been  brought  into  the  dis- 
trict by  American  enterprise  from  a  distance  of  some  110  miles. 
This  power  was  first  used  by  the  mines  in  1905  and  its  introduc- 
tion proved  a  great  advantage  and  has  much  to  do  with  the  suc- 
cess of  the  mining  enterprises.  Electric  power  is  sold  at  $75 
per  horse-power  per  year,  which  is  a  very  moderate  price;  before 
its  introduction  steam  power  cost  some  $200  a  year, 


SILVER  MINING   AT  COBALT  AND   GUANAJUATO         401 


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402  THE  COST  OF  MINING 

A  number  of  good  mills  have  been  built  and  are  now  opera- 
ting in  the  district,  the  results  of  which  are  given  in  an  accom- 
panying table.  It  will  be  seen  that  the  operating  costs  vary  from 
$1.62  per  ton  for  a  mill  of  the  capacity  of  400  tons  a  day  to  $2.50 
a  ton  for  one  having  a  capacity  of  only  50  tons. 

I  have  found  the  plant  expenditures  stated  for  only  one  mine 
—  the  Pinguico  —  at  which  the  total  cost  for  plant  and  equip- 
ment, including  mill,  mill  site,  storehouse,  supplies,  etc.,  was 
$680,000,  providing  for  a  treatment  capacity  of  some  80,000  tons 
a  year.  If  this  mine  may  be  taken  as  an  average  for  the  district, 
we  may  calculate  that  the  plant  costs  somewhere  around  $8.50 
per  ton  of  annual  output.  Since  there  is  every  reason  to  believe 
that  these  mines  will  be  fairly  long-lived,  it  seems  rational  to 
amortize  the  capital  over  a  period  of  fifteen  years  so  that  in 
round  numbers  the  capital  employed  is  worth  10  per  cent.,  or 
$0.85  per  ton.  Calculating  the  usual  amount  for  depreciation, 
6  per  cent.,  we  get  51  cents  a  ton  for  this  item.  It  is  stated 
that  mining  costs  in  the  principal  mines  are  about  $2.25  per 
ton. 

The  entire  minimum  cost  of  operating  at  Guanajuato  may  be 
tabulated  as  follows: 

Mining  $2.25 

Milling  1.60 

Milling  1.60 

Amortization    0.85 

Depreciation     51 

Total $5.21 

With  an  extraction  of  85  per  cent,  these  costs  mean  that  the 
minimum  grade  ore  that  can  be  handled  must  have  an  assay 
value  of  some  $6.50  per  ton,  which  means  in  round  numbers  some 
10  oz.  in  silver  and  $1  per  ton  in  gold. 

The  higher  grade  ores,  as  in  other  districts,  are  more  costly. 
The  Pinguico  mine  in  1908  produced  82,750  tons  of  ore  worth 
$1,088,000  or  $13.16  a  ton.  The  profits  were  $425,705,  or  a  trifle 
over  $5.14  a  ton,  so  that  the  total  costs  were  $8.02.  The  extrac- 
tion is  stated  to  be  85.56  per  cent,  of  the  gross  value  of  the  ore. 
In  this  case,  therefore,  the  minimum  value  that  will  stand  work- 
ing is  in  the  neighborhood  of  $10  a  ton. 

It  seems  that  up  to  the  present  the  profits  of  the  Guanajuato 


SILVER  MINING  AT  COBALT  AND   GUANAJUATO         403 

mines  have  been  very  moderate.  Pinguico,  just  mentioned,  is 
probably  the  most  prosperous.  It  produced  silver  in  1908  at  an 
approximate  cost  of  35  cents  an  ounce.  It  is  probable  that  for 
the  district  at  large  the  present  cost  of  silver  is  approximately 
50  cents  an  ounce  against  27  cents  at  Cobalt. 


INDEX 


PAGE 

Actual  costs 67 

Administration  expense 295 

Alaska  Mexican  Gold-Mining  Co., 

report     343 

Treadwell,  costs  per  ton    ....     25 

lost  ore 29 

report    342 

United  Gold  Mining  Co.,  re- 
port   ' 343 

Altitude  as  factor  of  cost 23 

Amalgamated  Copper  Co 168 

American  Smelting  &  Refining 

Co 298 

rates 287 

Amortization    40,   44 

charges 296 

copper-mining  business    127 

Michigan  copper  mines 133 

table   43 

Amygdaloid     deposits,     copper 

ore 134 

Anaconda 169 

amortization    49 

costs 170,  171 

Copper  Mining  Co.,  record.  . .   244 

system  of  veins 167 

Anthracite  mining 75,  76 

relation  of  cost  to  thickness 

of  seam    79,  80 

Apex  law    167 

Arizona  Copper  Co 179,  180 

copper,  mines 177 

Arkansas,  price  of  coal  at  mines .     67 
Atlantic  mine 142 

Balaklala    Consolidated    Copper 

Co 232 

Baltic  lode..  .    148 


PAGE 

Baltic  production  cost 239 

Beneficiating,  Cananea   Consoli- 
dated    203 

Bingham,  Utah  Consolidated ...  207 

Bisbee  district 184 

ores 247 

Bituminous  coal,   average  cost, 

Penn 72 

selling  and  cost  prices  ....  68 

Bonne  Terre  orebodies 260 

Boston  &  Montana,  costs 171 

Broken  Hill,  costs  per  ton 253 

district    287 

lode  252 

ores,  worth 289 

Proprietary,  mining  costs.  .  .  .  287 

Bunker  Hill  &  Sullivan 268 

total  costs 280,  286 

Butte  &  Boston,  costs 171 

Coalition,  costs    171 

copper,  production  cost .  .  243,  244 

silver  and  gold  output 85 

mines 166 

costs  per  ton    253 

reported  costs    170 

Calumet   &   Arizona,    amortiza- 
tion    49 

approximate  costs 248 

summary  of  operations  ....  186 

Hecla 159 

amortization 48 

cost  factors 170 

cost  of  all  plants 132 

cost  reduction 13 

dividends 336 

hoisting    22 

mining  costs    161 


405 


406 


INDEX 


PAGE 

Calumet  &  Hecla,  orebody   ....   133 

production  cost   239 

records 162 

Camp  Bird,  costs  per  ton 25 

report  for  year  ending  April 

30,  1908 347 

total  costs 348 

Cananea  Central  Copper  Co 196 

Consolidated  Copper  Co.,  re- 
port     198 

Canyon  Creek  mines 268,    281 

Capital  at  iron  mines,  U.  S.  Steel 

Corporation    88 

charges 14,  71 

copper-mining  business 127 

costs,  Copper  Queen 195 

expenditure    17 

U.  S.  Steel  Corporation    ...    112 
in  blast  furnaces,  U.  S.  Steel 

Corporation    90 

coal    and    coke    properties, 

U.  S.  Steel  Corporation .  .     90 
inventory  and  surplus,  U.  S. 

Steel  Corporation    90 

lead    industry,   Flat    River 

district    264 

transportation,  U.  S.  Steel 

Corporation    89 

new,  for  coal  mining 84 

U.  S.  Steel  Corporation 112 

used,  U.  S.  Steel  Corporation.     91 

uses  19 

Cash  surplus,   U.   S.   Steel  Cor- 
poration     113 

Champion  Copper  Co 153 

mine    36,239 

Reef,  output  and  valuation  of 

ore 357 

Clifton  district 192 

Morenci  district 177 

Climate  as  factor  of  cost    23 

Coal,  average  price  at  mines.  .  .     67 
factors     influencing     cost     of 

.mining 65 

of  cost  to  consumer 65 

mining  costs 64,  72 

way  to  prevent  wastes 83 


PAGE 
Coal  production  per  employee, 

Penn 55 

statistics 52 

United  States 59 

world 61 

properties,  subsidiary  com- 
panies, U.  S.  Steel  Corpora- 
tion    120 

Coal  fields,  U.  S 58,  62 

Cobalt  district 394 

record  as  a  whole    398 

Cosur  d'Alene  companies 8 

conditions 267 

costs  per  ton 253 

lead-silver  output 85 

mines 251 

ore,  smelting  cost    285 

Coke,  cost  at  ovens 72 

cost  to  Steel  Corporation  ....    106 

manufacture 75 

properties,  subsidiary  com- 
panies, U.  S.  Steel  Corpora- 
tion   120 

Colorado  Fuel  &  Iron  Co    73 

Complete  costs 68 

Concentrates,  production  cost  .  .       8 

Concentrating,  cost 237 

Bunker  Hill  &  Sullivan 275 

Butte  copper  mines 169 

Old    Dominion    Mining    & 

Smelting  Co 175 

ore 26 

copper 127 

Concentrators,  Cananea  Consoli- 
dated     201 

Conglomerate    copper    ores,    in- 
creased costs  of  working  ....    159 

deposits,  copper  ore    133 

mining  costs,  Calumet  &  Hecla  164 

Connellsville,  cost  of  coke   75 

cost  of  mining  and  coking .  .  .  69,  70 
Conservation  of  ore  deposits.  .  .     32 

Construction  costs 14 

costs,  Calumet  &  Hecla 162 

work,  cost,  Wolverine 135 

Contingent      expense,      Bunker 
Hill  &  Sullivan  .  .  .278 


INDEX 


407 


PAGE 

Copper  cost,  Calumet  &  Hecla .  .   165 
cost   of   producing   from   dis- 
seminated ores 238 

per  pound,  Mount  Lyell.  .  .  211 
per  pound,  Shannon  Copper 

Co 182 

per  pound,   Utah  Consoli- 
dated     209 

per  pound,  Utah  copper.  .  .    213 
per  ton,  concentrating  ores.    128 

per  ton,  smelted 237 

per  ton,  smelting  ores 128 

per    ton,    Superior  &  Pitts- 
burgh       188 

mines  on  fissure  veins 166 

mining  business 236 

cost,  Lake  Superior  district  131 

occurrence    122 

prices 6,  10,  249 

production 122 

cost 10,  128,  238,  243 

North  America    123 

Old  Dominion  Copper  Min- 
ing &  Smelting  Co 174 

plant  cost  per  annual  ton .  .    132 

United  States 124,  126 

world 123,  124 

Queen,  approximate  costs ....   248 
Consolidated  Mining  Co.  .  .  .    189 

ores 193 

timber  cost 184 

total  costs 195 

Range    49,  131 

Company  R.  R 131 

Consolidated  Co 134,.  148 

costs    150 

production  cost    239,   240 

total  average  earnings 158 

recovered  in  lead  smelting, 

price  for   297 

tonnage,  U.  S 128 

total  cost  per  pound 133 

Copperton    plant,  Utah  Copper 

Co 226 

Cost  and  profit,  concurrent  fluc- 
tuation           8 

average 7 


PAGE 

Cost  complete 39 

factors,   Anaconda  and  Calu- 
met &  Hecla 170 

increasing 12 

of  mining,  definition 19 

partial 39 

reduction    not    sign    of    pros- 
perity      12 

per  ton    13 

relation  to  price 10 

Cripple  Creek  district 374 

gold  output    85 

production,  cost    336 

recovery  and  losses 31 

total  costs 376 

Crushing,    cost    per    ton,    Wol- 
verine      135 

Custom  smelting  rates 286 

Cyaniding  cost,  Guanajuato  De- 
velopment Co 401 

Daly-Judge 290,  292 

West 290 

production 291 

smelting  results     293 

summary  of  costs    291 

Demand,   comparative,   for  dif- 
ferent articles 6 

Depreciation 40,  42 

charges 44 

copper-mining  business    .  .  .    127 
U.  S.  Steel  Corporation    ...     91 

Depth  as  factor  of  cost 22 

Derby  (Federal)  mine    259 

Detroit  Copper    Mining    Co.    of 

Arizona 192,  196 

Development  cost 359 

cost,  Goldfield  Consolidated .  .   390 

Mysore    362 

Old  Dominion  Copper  Min- 
ing &  Smelting  Co 175 

Portland  mine 380 

work,  Portland  mine 379 

Desloge  Lead  Co 263 

Disbursements',  Utah  Copper  Co.  215 
Disseminated     copper     ores     in 

West,  cost  of  mines 241 


408 


INDEX 


PAGE 

Disseminated  ores 236 

production  cost 251 

sulphide  ores,  lead    250 

Dividends,  Calumet  &  Hecla  ...    163 

costs    41 

Utah  Copper    214 

from  mining  property 15 

Osceola  Cons.  Mining  Co 146 

Quincy  Mining  Co 146 

U.  S.  Steel  Corporation .    ..  1 15, 1 18 

Doe  Run  Lead  Co 263 

Douglas  Production  Works,  out- 
put      189 

Drift  running,  Wolverine 134 

Drilling  costs,  Joplin  field 314 

southeast  Missouri 260,  261 

Earnings,   disposition  of,   U.   S. 

Steel  Corporation 114,   115 

net,  American  Smelting  &  Re- 
fining Co 305 

Economy  and  speed  in  mining     37 

effective,  in  coal  mining 82 

of  large  ownership 102 

El  Oro,  costs 352 

gold  production,  cost 337 

grade  of  ore  and  output 351 

mines    349 

Electrolytic  copper  cost,  Miami 
Copper  Co 183 

Employees  in  coal  mines,  U.  S. .     55 

Esperanza,  costs 352 

grade  of  ore  and  output 351 

Expenditures,    Alaska    Mexican 

Gold  Mining  Co 343 

Alaska  Treadwell  Gold-Mining 

Co 342 

Atlantic  Mining  Co 143 

Baltic  Mining  Co 151 

Champion  Copper  Co 153,  154 

Mohawk  Mining  Co 139 

Quincy  Mining  Co 147 

Ready  Bullion 343 

Trimountain  Mining  Co.  .  155,  156 

Exploration  costs,  Joplin  field  .   314 
expense,   Bunker  Hill  &  Sulli- 
van   .  .   278 


PAGE 

Exploration,  U.S. Steel  Corpora- 
tion    100 

work,  Butte  copper  mine.  ...  169 
External  factors,  Arizona  copper 

mines 177 

factors,  Broken  Hill  Proprie- 
tary    288 

Butte 166 

Camp  Bird    346 

Cceur  d'Alene 267 

El  Oro 352 

Homestake 345 

Kalgoorlie 382 

Treadwell  group 340 

Federal  Lead  Co 262,  263 

Mining    &    Smelting  Co.,  net 

profit,  1907 8 

report 281 

Filling,  Butte  copper  mines.  ...  169 
First  National  Copper  Co.  .  .232,  248 
Fissure  vein  deposits,  lead .  .  .250,  251 

Flat  River  district 257,  259,  260 

Fredericktown,  Mo.,  orebodies.  .   960 
Freight  charges,  copper  produc- 
tion      133 

on  base  bullion 297 

rates,  Kolar  district 354 

on    coke,    Connellsville    to 
Pittsburg    106 

Galena,  Kan.,  orebodies 311 

Garfield     plant,     Utah     Copper 

Co 225,  228 

Gary,  Judge,  cost  figures  given 

by    107 

General  expenses,  Wolverine.  .  .  135 
Globe,  Ariz.,  total  operating  cost  176 
Gold,  occurrence  and  production .  324 

produced  as  important  constit- 
uent of  smelting  ores 333 

production  cost  per  ounce ....   336 

world 332,  334 

Golden  Horseshoe,  mining  costs.   385 

Horseshoe,  operating  costs  .  .  .   388 
Goldfield 389 

Consolidated    .  .   389 


INDEX 


409 


PAGE 

Goldfield  Consolidated  costs  per 

ton 392 

Grace  Zinc  Co 318,  319 

Granby    Consolidated 211,247 

248 

costs  per  ton 211 

Great  Boulder  Perseverance, 
comparison  with  Port- 
land mine  387 

mining  costs 386 

Proprietary,         comparison 

with  Portland  mine   .  .   387 

mining  costs    • 386 

Greene-Cananea  Co 196 

Consolidated    196 

Guanajuato    399 

Haulage    costs,    Lake    Superior 

iron  ore 106 

Hecla  mine,  cost  and  value  of 

ore 283 

Hercules  mine 283 

Hibbing  district,  cost  per  ton  of 

coal  mined 99 

district,    production    of    Steel 

Corporation  mines 99 

High-grade  carbonates,  lead ....   250 

sulphides,  lead 250 

Hoffman  (St.  Joe)  mine 259 

Hoisting,  Joplin  district,  cost.  .  .   316 

Homestake,  costs   345 

Homogeneity  of  ore 26 

Hoover's  theorem 36 

Idaho,  price  of  coal  at  mines.  . .     67 

Illinois,  cost  of  coal  mining.  ...     74 
percentage  of  yield  from  coal 
seams    81 

Improvement  charges 358 

Increases  of  capacity,  U.  S.  Steel 
Corporation    Ill 

Individual   management,    draw- 
backs      101 

Interest  charges 296 

charges,  U.  S.  Steel  Corpora- 
tion       92 

Internal  factors,  Butte 167 


PAGE 

Internal  factors,  Camp  Bird ....   346 

Cceur  d'Alene 267 

El  Oro 352 

Homestake 345 

Kalgoorlie 382 

Kolar  district 355 

of  cost 24 

Treadwell  group   340 

Investment,  value  of  property  as     15 
Iron     manufacture,     extent     of 

region  of 103 

mines,   subsidiary  companies, 

U.  S.  Steel  Corporation.  .    118 

U.  S.  Steel  Corporation 92 

ores,  Lake  Superior  region.  .  .     85 
Ivanhoe  mine,  comparison  with 

Portland  mine 387 

mine,  mining  costs 385 

Joplin  cost  statements 318 

field  311 

ore  shipments 308 

orebodies    256 

zinc  and  lead  output 86 

Kalgoorlie 374 

gold  production,  cost 336 

mines 382 

Kerr  Lake  Mining  Co.,  costs.  .  .  .  399 

Kolar  district 353 

gold  production,  cost 337 

Labor,  Butte  mines 166 

cost 20 

and  wages 65 

Bunker  Hill  &  Sullivan  ....  277 

coal  mines 72 

different,  with  same  rate  of 

wages      66 

Kolar  district    354,  362 

the  Rand 370 

Cripple  Creek 380 

efficiency 20 

a  function  of  cost 371 

and  supply 11 

Guanajuato    400 

Lake  copper,  price 238 


410 


INDEX 


PAGE 

Lake  freight  on  iron  ore 106 

Superior    amygdaloid    copper 

mines 129 

conglomerate  copper  mines.  159 

copper  deposits,  nature.  ...  133 

copper  mining  district 130 

copper,  recovery  and  losses.  31 

district,  cost  of  copper ....  239 

district,  pig  iron  putput ....  86 

iron,  cost  of  mining 85 

iron,  recovery  arid  losses.  .  .  31 
iron,       transportation       to 
smelting   and   consuming 

centers    104 

mines,  wages 166 

ore 238 

ore,  total  cost .  103 

Smelting  Co 133 

Last  Chance,  cost  and  value  of 

ore 283 

Lead,   cost  per   pound,    Broken 

Hill    289 

cost  per  pound,  Bunker  Hill 

&  Sullivan    280 

mining 250 

ore  production,  cost 253 

production  by  States 255 

refinery,  cost   298 

Legal  services,  cost,  Bunker  Hill 

&  Sullivan    278 

Liberty    Bell    mine,    results    of 

operations 348 

Life  of  mine 50,  127 

Losses,     effect    in    determining 

costs    28 

on  zinc  ore 318 

Portland  mine 378 

proportion  to  recovery 31 

Maintenance  cost  40 

Management  33 

Manufacturing  plants  owned  by 

subsidiary   companies,    U.    S. 

Steel  Corporation 116 

Maps,  U,  S.  Steel  Corporation .  .  100 
Marketing,  cost,  Cceur  d'Alene 

ore  .                                           .  284 


PAGE 

Marketing,  cost,  Wolverine 135 

expense,  copper  production .  .    133 
product  as  factor  of  cost ....     24 
Mesabi   range,    average   cost   of 

mining 99 

range,  cost  of  mining 95 

Metal  content,  diminished,  and 

cost  reduction 13 

prices 7 

selling  value,  N.  Y.,  of  out- 
put of  various  mining  dis- 
tricts    85 

Metallurgical  treatment,  cost.  .  .     26 

Mexican  mine    338 

average  costs  344 

costs,  1907 345 

Mexico,  copper  mines 177 

Miami  Copper  Co   16,  182 

mine,  production  costs 242 

Michigan  coal,  cost 72 

coal  mines,  wages 72 

mining,  costs 72 

Smelting  Co 132 

Mill  saving,  Daly- West 292 

Milling  cost,  Calumet  &  Hecla.  .    161 

copper  production 132 

El  Oro 351 

Homestake,  1907 346 

quartz-pyrite  ores 330 

Robinson  Gold  Mining  Co .  .   367 

southeast  Missouri    262 

Wallaroo  and  Moonta  mines  173 

Wisconsin       320 

Goldfield  Consolidated 391 

losses 30 

Camp  Bird    347 

Portland  mine 378 

Mills,  Joplnf  district,  cost 317 

Minerals    furnishing    output    of 

copper  mines    122 

products,  U.  S 3,4 

Mining  and  milling  costs,  copper 

production    132 

Butte  district 169 

costs    32 

Bisbee 184 

Bunker  Hill  &  Sullivan  .      .  270 


INDEX 


411 


PAGE 

Mining  costs,  Calumet  &  Arizona  187 
Cananea  Consolidated .  .  199,  203 

Clifton,  Ariz 184 

Cobalt 396 

comparative,       amygdaloid 
and  conglomerate  copper 

ores 161 

disseminated  ores    238 

ElOro 351 

Goldfield  Consolidated 391 

Greene  Consolidated 197 

Homestake 346 

Kalgoorlie 385 

low,    greater   expense   else- 
where         26 

Mysore    329 

Old    Dominion    Mining    & 

Smelting  Co 175 

Portland  mine 377 

Robinson  Gold  Mining  Co. .  .   367 

Shannon  Copper  Co 181 

Wisconsin 320 

Witwatersrand 365 

investments,  nature 14 

methods  of  different  districts .     34 

property,  value 1 

Missouri  lead 256 

lead  district 251 

mining  districts 255 

zinc  district    311 

Moctezuma  Copper  Co 190,  195 

Mohawk  mine,  production  cost.   240 

Mining  Co 132,    139 

Monongahela  River  Consolidated 

Coal  &  Coke  Co. 71 

Montana  copper  mines,  costs    ...    171 

Moonta,  costs  per-ton  .  .^ 253 

production  cost 243 

Morenci,  Ariz 192 

Morning  mine,  cost  and  value  of 

ore 283 

Mount  Lyell 247 

approximate  costs 248 

Company    209 

costs  per  ton    210 

Mysore,  cost  and  grade  of  ore.  .   361 
costs  at  the  mines .  .  .   360 


PAGE 

Mysore,  costs  per  ton 347,  357 

development  costs 359 

output  and  valuation  of  ore .  .   357 

Nacozari,  Mex 192 

Nevada    Consolidated,    produc- 
tion cost   241 

New  South  Wales,  zinc  produc- 
tion     308 

Nipissing,  costs 398 

North  American    mine,    Freder- 

icktown,  Mo 260 

Butte,  costs 171 

Mount  Lyell 209 

Northern      California      Copper 
mines 230 

Nundyroog    mine,    output    and 
valuation  of  ore   357 

Office  expenses,  Bunker  Hill  & 

Sullivan    277 

Old  Dominion 49 

Copper    Mining    &    Smelting 

Co    174 

costs  per  ton 253 

Oliver  Iron  Mining  Co 92 

Ontario  mine,  Park  City 290 

Ooregum  mine,  output  and  valu- 
ation of  ore 357 

Open-cut  mining  costs  variable.     97 

operations,  exigencies  of 96 

vs.  underground  mining 96 

Open-pit  work,  cost 98 

Opening    work,    cost,    Shannon 

mine    178 

Operating  charges 14 

Copper  Queen 194,   195 

Flat  River  District 265 

costs   19,  40,  71 

Balaklala  Consolidated 234 

Lake  Superior  mines 94 

minimum,  Guanajuato  ....   402 
Philadelphia  &  Reading  Coal 

&  Iron  Co 77 

Portland  mine 377 

Tennessee  Copper  Co 205 

U.  S.  Steel  Corporation ....     91 


412 


INDEX 


PAGE 

Operating   costs,  Wallaroo   and 

Moonta  mines 173,  174 

expenses,  Wolverine 135 

Ore,  cost  delivered  at  Pittsburg.  106 

cost,  Mesabi  range 95 

old  ranges,  Lake  Superior .  .  94 

Kalgoorlie 383 

lead  250 

reserves,  Bunker  Hill  &  Sullivan  279 
resources,  U.  S.  Steel  Corpora- 
tion, Lake  Superior 93 

total  cost,  St.  Louis  Smelting 

&  Refining  Co 261 

value,  Cananea  Consolidated  .  198 

division  of    304 

Orebody,  attitude 25 

characteristics  as  factor  of  cost  25 
effect   of    size    of   on    mining 

costs 329 

Oroya-Brownhill    mine,    Mining 

costs    315 

Osceola  amygdaloid,  Calumet  & 

Hecla  costs 162 

amygdaloid,  mining  cost 164 

Consolidated  Mining  Co 145 

production  cost 240 

Output  per  man  per  day,  coal 

mines 72 

per  man   per  day,   Lake   Su- 
perior mines 94 

Mesabi  range 95 

Over-competition  in  coal  mining 

in  U.  S 83 

Park  City,  lead  and  silver 289 

mines,  costs 254,  290 

ores,  factors  making  high 

costs  293 

minimum    costs 294 

Partial  costs 40 

Pennsylvania,   output  per  man 

at  coal  mines 72 

price  of  anthracite  at  mines .  .  67 

Phelps,  Dodge  &  Co 188 

Philadelphia  &  Reading  Coal  & 

Iron  Co 48,  77 

statement  of  costs ,  .  .  78 


PAGE 

Pig  iron,  cost  N.  Y 86 

production  cost 106 

Pilares  mine 190 

Pinguico,  plant  expenditures.  .  .   402 
Pittsburg  as  iron  manufacturing 

center    103 

Coal  Co    48,  70 

recovery  and  losses 31 

Placer  districts,  gold  yield 333 

Plant     required,    copper-mining 

business 127,  131 

Population  as  factor  of  cost ....     23 

Portland  mine 376 

mine,  amortization 49 

comparison  with  Kalgoorlie 

mines 387 

Present  value,  determination.  .  .      15 
value  of  annual  dividend ....     46 

Prices,   average 5 

bituminous  coal 59,  60 

Flat  River  district  lead 266 

relation  to  cost 10 

Production  costs 41 

Profits,  actual,  U.  S.  Steel  Cor- 
poration        115 

American  Smelting  &  Refining 

Co    302 

Calumet  &  Hecla 164 

costs  and,  concurrent  fluctua- 
tion         8 

net,  U.  S.  Steel  Corporation.  .    114 
per  ton  of  ore  smelted,  Ameri- 
can Smelting  &  Refining  Co.  301 

vanishing  point 8,  10 

zinc  ores 318 

Public  policy  in  coal  mining.  .  .     80 
Pumping,    cost,    Lake    Superior 
region    98 

Quartz-pyrite      districts,      gold 

yield    333 

gold  mines 338 

ores,    cost     of     mining     and 

milling 328 

with  low  concentration 243 

Quincy  company 132 

mine    134 


INDEX 


413 


PAGE 

Quincy  mine  production  cost  239,  240 
Mining  Co 146 

Rand,  working  costs 369 

Ray    Consolidated,     production 
costs    242 

Ready  Bullion ' 338 

average  costs 344 

costs,  1907    345 

Receipts,  Alaska  Mexican  Gold- 
Mining  Co 343 

Alaska  Treadwell  Gold-Mining 

Co 342 

Atlantic  Mining  Co 143 

Baltic  Mining  Co 151 

Calumet  &  Hecla 163 

Champion  Copper  Co.  .  .  .  153,    154 

Mohawk   140 

Quincy  Mining  Co 147 

Ready  Bullion 343 

Trimouii tain  Mining  Co.  .  .155,  156 

Utah  Copper  Co 215 

Wolverine  Mining  Co 137 

Recovery,  proportion  to  losses.  .     31 

Reduction,     Cananea     Consoli- 
dated     202 

Refineries.  American  Smelting  & 
Refining  Co 307 

Refining     cost,     Butte     copper 

mines 169 

Coeur  d'Alene  ore   284 

United  States 295 

expense,  Wolverine 135 

Reynoldsville,  cost  of  coke 75 

cost     of     mining     and     cok- 
ing   69,  70 

Rich  mines  more  costly  to  run 
than  low-grade 35 

Rio  Tinto 247 

Roasting,  cost,  U.  S 295,  296 

telluride  ores,  cost 331 

Robinson  Gold  Mining  Co.,  gen- 
eral expense 368 

report  to  end  of  1906 366 

mine    336 

Royalties,  U.  S.  Steel  Corpora- 
tion .  .  93 


PAGE 

St.  Joe  Lead  Co 263,  266 

St.    Louis  Smelting  &  Refining 

Co 261,  263 

San  Juan  region 346,  349 

Selling  costs 41 

copper,     Granby     Consoli- 
dated     212 

copper,  Utah  Consolidated.   209 

copper,  Utah  Copper 214 

lead,  Bunker  Hill  lode 286 

Shaft  sinking,  Joplin  district,  cost  315 

Kolar  goldfields,  cost 362 

Old    Dominion     Mining    & 

Smelting  Co.,  cost 175 

United  States,  cost 362 

Shannon  Copper  Co 179,  180,  181 

Shipping  expense,   Bunker  Hill 

&  Sullivan    277 

ore,  production  cost,  Bunker 

Hill  &  Sullivan 274 

Silver  King    ..290,  293 

lead  mining    267 

smelting,  cost 295 

mining 393 

Smelted  ore,  copper 127 

Smelteries,  American  Smelting  & 

Refining  Co    307 

Smelting  and  refining,  total  cost    298 

charges 262 

costs,  Broken  Hill  and  Coeur 

d'Alene  ores 288 

Butte  copper  mines 169 

Calumet  &  Hecla 161 

Cceur  d'Alene 284 

conglomerate  copper  ores.  .    159 

copper  production 133 

Park  City  ores 293 

United  States 295 

Wolverine 135 

losses 30 

ores 247 

lead 250,  254 

plants,  copper  production.  .  . .    132 

southeast  Missouri 262 

Smyth's  formula 29 

Sorting  and  filling  method,  Lake 

Superior  copper  district.  148,  149 


414 


INDEX 


PAGE 

Sorting  and  milling  costs,  Wal- 
laroo and  Moonta 173 

cause  of  ore  loss 29 

cost  per  ton,  Wolverine 135 

Southeastern  Missouri  lead,  re- 
covery and  losses 31 

Southern  Coal  &  Coke  property, 

U.  S.  Steel  Corporation 120 

Southwestern  Missouri  zinc,  re- 
covery and  losses 31 

Speed  in  mining 37 

Spelter,  cost 319 

Leadville 322 

production  cost,  Joplin 323 

Wisconsin 322 

United  States 309 

Standard-Mammoth  mine 282 

cost  and  value  of  ore 283 

Steam  shovel  costs,  Utah  Copper 

Co 222 

work,  Lake  Superior  region, 

costs   97 

Stanton  group  of  mines 134 

Stoping    cost,    Bunker    Hill    & 

Sullivan    273 

Clifton-Morenci  district  ...  178 

Goldfield  Consolidated 391 

Stripping  cost,  Utah  Copper  Co . 

222,  223 

removal,  cost 95 

Subsidiary  companies,  U.  S. 
Steel  Corporation,  miscel- 
laneous properties 120 

Superintendence  expenses,  Bun- 
ker Hill  &  Sullivan 277 

Superior  &  Pittsburgh 187,  248 

Supplies,   cost    20,   21 

Bunker  Hill  &  Sullivan  ...  277 

Kolar  district 354 

Surplus,  U.  S.  Steel  Corporation  114 

Tamarack  mine 133,  159 

results  and  costs 160 

Taxes     on     mining     properties, 

Minn 100 

Telluride  mining  districts,  gold 

yield    333 


PAGE 

Telluride  ores 331 

Temperature     of     underground 

workings 22 

Tennessee  Copper  Co  .  .205,  247,  248 
Tiger-Poorman    mine,   cost  and 

value  of  ore 283 

Timber,  cost,  Copper  Queen ....   184 
Timbering 22 

Butte  copper  mines 169 

Tonnage  of  coal  fields,  U.  S 62 

Tramming  costs,  Bunker  Hill  & 

Sullivan    274 

Transportation  as  factor  of  cost .     23 

costs,  copper  production 131 

Wolverine 135 

of  ores 103 

Transvaal,  cost  of  supplies....     21 

gold  output 85 

Treadwell,  amortization 49 

average  costs 344 

costs,    year   ending   May   31, 
1907 345 

group  of  mines 338 

mining  cost 329 

Treatment  costs,  Robinson  Gold 

Mining  Co 367 

methods,  Butte  copper  mines  168 
Trimountain  Mining  Co 155 

production  cost 239 

Underground  conditions 22 

costs,  Baltic  mine 149 

Wolverine 135 

factors  of  increased  cost,  Calu- 
met &  Hecla 161 

mining,  cost 96,  98 

cost,  Utah  Copper  Co 223 

work,  Wolverine 134 

United  States,  coal  production .  52,  56 

Steel  Corporation 37 

activities 88 

amortization    48 

cost  of  coal  at  mines.  ...  72 

management    102 

products 108 

products     of     subsidiary 

companies  .  .  . 110 


INDEX 


415 


PAGE 

United  States,  Steel  Corporation 

reports 87 

statistical  record 108 

taxes,  Minn 100 

Unwatering  open  pits 98 

Utah  Consolidated   247 

amortization    49 

approximate  costs 248 

costs  per  ton    208 

Copper 206,  212 

amortization    49 

production  cost 227,  241 

report    215 

Valuation    of    mining     proper- 
ties   5 

Variations,  factors  governing.  .  .  19 

Virginia  colliery,  cost  sheet  ....  73 

cost  of  coke 76 

Wages,  Arizona  copper  mines.  .   177 

Butte  copper  mines 166 

Canyon  Creek  mines 281 

coal  mines,  U.  S 72 

Cripple  Creek 370,  380 

differing  yet  costs  the  same.  .     66 

Guanajuato    400 

Kolar  district 362,  370 

Lake  Superior  region. 94,  129,  166 

Mysore 354 

rate  of 65 

Tennessee  Copper  Co 205 

the  Rand 370 

United  States 20 

Wages,  United  States  Steel  Cor- 
poration         72 


PAGE 

Wages,  Wardner 281 

Wallaroo 172 

costs  per  ton 253 

production  cost 243 

Wardner   mines,    Coeur   d'Alene 

district    268 

Warren  district,  Ariz 184 

Wastage,  ore 28 

Waste  in  coal  mining,  causes.  . .  81 

in  exploitations 31 

WTebb  City  zone 311 

WTest  Virginia,  price  of  coal   at 

mines 67 

Wisconsin,  zinc  mining 320 

Witwatersrand,  gold  field 363 

mining  costs .  .  .  364 

orebodies    330 

Wolverine   132,  134 

production  cost 239,  240 

receipts  and  expenditures  .  .  .  137 
Working      expenses,      Atlantic 

mine 143,  144 

Baltic  Mining  Co 152 

Champion  Copper  Co 154 

Mohawk 141,  142 

Trimountain  Mining  Co ....  156 

Wolverine  .  .  .  135,  136,  137,  138 

Wyoming,  coal  miners'  wages.  .  72 

coal  mining,  costs 72 

Zinc  district,  southwest  Missouri  311 

mining 308 

Wisconsin,  cost 321 

ore,  costs 318 

production,        Europe        and 

America    .                             .  310 


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